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I saw a question in the mock exam regarding cash flow from finance activity:
Long term liability (2013 ) $22,100 (2012) $14,000
The correct answer is ‘taking off $8,100’ from loan. If loan has increased shouldn’t we add it to finance activity because we are getting money?
We do add it to cash flows from financing activities, which is what the correct answer is.
The choices were ‘taking of loan’ or ‘repayment of loan’ – the correct answer is ‘taking of loan’ (not taking off loan – that was not an option).
For the numbers, the choices include +8,100 and -8,100.
The correct answer is +8,100 (which means we are adding it rather than subtracting it).So what you write is correct and is what the exam shows as being correct!
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