Question

hunt community development agency (hcda), a financially independent authority, provides loans to commercial businesses operating in hunt county. this year, hcda made loans totaling $500,000. how should hcda classify the disbursements of loans on the cash flow statement?

Answer 1

The HCDA should record the $500,000 of loan disbursements in the investing activities section of their cash flow statement as an outflow of cash, according to standard accounting principles.

Step-by-step explanation:

The Hunt Community Development Agency (HCDA) should classify the disbursements of loans on the cash flow statement under the category of investing activities. When HCDA provides loans to commercial businesses, it is essentially investing in those businesses. According to generally accepted accounting principles (GAAP), loan disbursements are considered outflows of cash in the context of investing activities. Therefore, the $500,000 in loans made by HCDA will be recorded as a reduction in the cash balance within the investing section of the cash flow statement