[Char143]

Which of the following would be reported as an investing activity in a company’s statement of cash flows?
A. Collection of proceeds from a note payable.
B. Collection of a note receivable from a related party.
C. Collection of an overdue account receivable from a customer.
D. Collection of a tax refund from the government.

The answer is B, and I am really confused because I feel like both A & B are the same thing and that they are both financing activities..?

A) Collection of proceeds from a note payable: is this a play on words like we collected money from someone who has a note payable and owes us money? The j/e being:
Cash xx
Note pay xx

B) I feel like this is the same journal entry as above (debit cash & credit note pay) what am I missing here?

Also I read the answers over and over trying to understand: Does “COLLECTION OF note receivable” mean we added a receivable to our b/s and not that we “collected” money on it? so confused..

AUD - 84
BEC - 79
FAR - 78
REG - 79

I'm done! 🙏🏼

 

Licensed CPA

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[Anonymous]

I haven't taken FAR yet so someone please correct me if I'm wrong. But I think the difference is that A) is a note payable, which would be a financing activity, and B) is a note receivable, which is an investing activity.

[Char143]

It says *COLLECTION of proceeds from a note payable (essentially what I am thinking it is telling me that it is a note receivable to the organization)* – not paying on note payable. So that is the part that is throwing me off.

AUD - 84
BEC - 79
FAR - 78
REG - 79

I'm done! 🙏🏼

 

Licensed CPA

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[Anonymous]

I think that is referring to the person you are borrowing money from giving you the money.

[Gary]

You're using the proceeds from a NP to pay for something else, which is a form of financing. You're collecting on a NR which you issued that is payed back with interest, which is investing.

AUD - 89
BEC - 84
FAR - 89
REG - 90

AUD - 89

FAR - 89

BEC - 84

REG - 90

YES!

AUD 8/18/16
FAR 11/16
BEC 1/17
REG 2/17

[Char143]

Still extremely confused. Collection of proceeds of a note payable means I used the proceeds to pay for something else? How did that fact come about? What am I missing here

AUD - 84
BEC - 79
FAR - 78
REG - 79

I'm done! 🙏🏼

 

Licensed CPA

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[Char143]

Wait.. Allison, that helped me…

Collection of proceeds from a note payable is the collection of the actual money when handing over the note payable. OMG I was reading this all wrong. I'm sorry. I was looking WAYYYYY toooo deep into the question and thinking it was a trick.

AUD - 84
BEC - 79
FAR - 78
REG - 79

I'm done! 🙏🏼

 

Licensed CPA

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[Char143]

Thank you guys!!! I can move on now :/

AUD - 84
BEC - 79
FAR - 78
REG - 79

I'm done! 🙏🏼

 

Licensed CPA

AUD (2/16)-84
REG (05/16)-69 Retake (7/16)-79 (ty ninja MCQ)
BEC-TBD
FAR-9/8/16

[Anonymous]

No problem! Glad I could help 🙂

[Author]

Replies