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Where would mortgage payable go on statement of cash flows?
I'm working on statement of cash flows and can't figure out if I put the mortgage payable in there. Dec 31 Mortgage payable was $400,000. During the month of Jan it was paid off using a portion of money received from selling common stock (so no more mortgage payable). How and where would i put this on a statement of cash flows. Aren't payables operating activities?
2 Answers
- 8 years agoFavorite Answer
In operating activities, the payable included is only accounts payable because accounts payable involves the cash effects of transaction more than borrowing money from creditors. As for 'issuance of debt' such as bonds and notes, they're put in financing activities. Why? Because by issuing bond and notes, a company borrows money from creditors like bank or other financing companies. So I think mortgage payable is put in the financing activities, not operating activities. Note that the keywords in cash flows are 'operating', 'investing' and 'financing', then you will understand their differences and get the whole concept.
Oh and about how to put it, since it's one of "noncash activities" you just need to put it below the statement of cash flows like this:
Noncash activities:
Issued common stock to pay off $400,000 of mortgage.
Source(s): Accounting Major - Anonymous5 years ago
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