Chester Company began 2016 with a note payable of $20,000 and interest payable of $800.During the year,the company accrued an additional $400 of interest expense,and paid off the note with interest.On the company's 2016 income statement,cash flows for financing activities related to the note would be:
A)$1,200 outflow
B)$20,000 outflow
C)$20,400 outflow
D)$21,200 outflow

Question

Quizplus · Accepted Answer

The cash flow for financing activities related to the note would be the principal amount of the note payable, which is $20,000. Interest payments are considered operating activities, not financing activities.

Chester Company Began 2016 with a Note Payable of $20,000