CFA Practice Question

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CFA Practice Question

Under SFAS-95, the form of certain transactions affects what is reported. Principal payments of notes payable to suppliers of goods and services should be reported as ______ outflows; principal payments of notes payable to suppliers of plant assets (other than down payments) should be reported as ______ outflows, and principal payments of notes payable to non-supplier creditors should be reported as ______ outflows.

A. operating; financing; operating
B. operating; financing; financing
C. financing; operating; financing
Correct Answer: B

User Contributed Comments 3

User Comment
robbiecow Just FYI...The down payment is classified as investing.
mbowa What is SFAS-95 in full?
ascruggs92 mbowa, I'm in a different boat that most people since I majored in accounting in college and I just remember this stuff from classes. However, I would say not to worry about what an individual rule like that says. Learn the concepts, then when you have a question like this about a specific rule in the book you won't need to know what it says because you will know that notes payable to suppliers is the definition of accounts payable which are classified as operating cash flows, notes payable for plant assets is classified as debt (financing) and so on.
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