Perez Company is preparing its statement of cash flows using the indirect method. Refer to the following information: 1)Repayments on Long-Term Notes Payable $58,000
"2)New borrowing on Long-Term Notes Payable $19,000
Which of the following statements is accurate regarding the statement of cash flows?"
A)Net cash used for financing activities will amount to $(39,000).
B)Net cash used for investing activities will amount to $58,000.
C)Net cash provided by financing activities will amount to $39,000.
D)Net cash provided by investing activities will amount to $39,000.

Question

Quizplus · Accepted Answer

The repayment on long-term notes payable is a cash outflow from financing activities, while the new borrowing on long-term notes payable is a cash inflow from financing activities. Therefore, the net cash used for financing activities will be calculated as the difference between the two, which is $58,000 (repayments) - $19,000 (new borrowing) = $39,000. Hence, option (A) is correct.

Option (B) is incorrect because the repayment is a financing activity, not an investing activity.

Option (C) is incorrect because the correct amount of net cash provided by financing activities is $39,000, not $-39,000.

Option (D) is incorrect because none of the activities mentioned relate to investing activities.

Perez Company Is Preparing Its Statement of Cash Flows Using