Question

Madison Company issued an interest-bearing note payable with a face amount of $9,000 and a stated interest rate of 8% to the Metropolitan Bank on August 1, 2016. The note carried a one-year term.
6.

The amount of cash flow from operating activities on the 2016 statement of cash flows would be:
$720.

$300.

$9,000.

zero.

Answer 1

Answer:

zero

Explanation:

The activity in this scenario is fund raising/ issue note to a bank which is booked in financing activities, not in operating activities.

Thus we can said "there's no operating activity in Madison Company cash flow of 2016" if there's no other information.