CFA Practice Question

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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 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.
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