Question

jack company issued a $12,000 note payable on september 1, year 1 for a one year term. interest was set at 5% per year. in year 2, jack would recognize cash outflow from operating activities of .

Answer 1

The jack would recognize cash outflow from operating activities of $400.

What is cash outflow?

Cash flow describes  money coming out of a business. Salaries to employees, maintenance of facilities, and dividends paid to shareholders are prominent examples of cash flows experienced by many businesses. The opposite of cash flow is cash flow, which refers to  money coming into the business. If a company's cash flow is greater than its cash flow, it can be said that the company is in pretty bad shape.

Calculate free cash flow by adding net income and non-cash expenses and then subtracting your changes in working capital and investments.

The three categories of cash flows are

• operating investing  
• financing activities.
• a cash outflow from financing activities of $12,000
• a cash outflow from operating activities of $600
•  Therefore  interest expense    = $12000-$600
•                                                 = $400

To learn more about cash outflow, refer;

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