Team Shirts,Inc.had net cash from operating activities of $50,000.It paid $40,000 to buy a new computer system by signing a $30,000 note and paying the balance.Net cash from (or used for)financing activities for the period was ________.
A)$(30,000)
B)$10,000
C)$30,000
D)$0,however a note discloses the amount of the purchase financed by issuing a note payable

Question

Quizplus · Accepted Answer

The correct answer is D because the payment for the computer system does not affect the net cash from financing activities directly. The $30,000 note signed is a financing activity, but since it is an increase in liabilities (not an outflow of cash), it does not impact the net cash from financing activities. The disclosure note is required to inform about the financing arrangement.