- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 4. Analyzing Statements of Cash Flows I
- Subject 2. Classification of Cash Flows and Non-Cash Activities
CFA Practice Question
Although short-term notes payable are classified as a current liability, cash transactions involving short-term notes are classified as financing activities on the statement of cash flows. True or False?
Correct Answer: True
According to FASB No. 95, cash transactions involving short-term notes relate to debt and, despite being a current liability, are classified as financing activities.
User Contributed Comments 8
| User | Comment |
|---|---|
| Dinosaur | this does not include accounts payable? |
| Micha | As I understand the explanation it includes only "notes". Thus they are not included in working capital. |
| justbassbaby | isn't paying interest CFO? |
| gill15 | In the CFA curriculum book an example on pg 253 states company issued a 30000 90 day note at 8 percent. The end result was CFO decreased by 30000. CFF was not the answer. If they say its a 90 day note and dont say its a short term 90 day note..is that the difference. That cant by right. |
| Shaan23 | Gill. I just read that example. its a 180 day note. Maybe thats not considered a short term note but if it is that's definitely a discrepency with this answer. |
| Shaan23 | Gill. Actually. Redid the question. They do say the 180 day note is a CFF. Read again. |
| xemex131 | Any bond issue is a CFF, short term and long term doesn't matter...Same with repayment of the principal.. |
| kingirm | Agree without xemex. Doesn't matter short or long term. |