What is the impact on the cash flow statement from an increase in short-term notes receivable,assuming the indirect method is used?
A)A decrease in the cash flow from operating activities
B)An increase in the cash flow from operating activities
C)An increase in the cash flow from financing activities
D)An increase in the cash flow from investing activities

Question

Quizplus · Accepted Answer

An increase in short-term notes receivable means that the company has lent money to its customers, which is an operating activity. However, this increase shows up as an increase in accounts receivable on the balance sheet, not as cash received. Therefore, it is added back to net income in the operating activities section of the cash flow statement. This takes a while for the company to receive its cash, so as a result, cash flow from operating activities decreases.

What Is the Impact on the Cash Flow Statement from an Increase