Final answer:
Collecting the principal on notes receivable is recorded as an inflow under Investing activities on the Statement of Cash Flows, as it pertains to the return of investment in the form of loans provided.
Step-by-step explanation:
The collection of the principal on notes receivable relates to inflows and outflows on a company's Statement of Cash Flows (SOCF). When a business collects the principal amount of notes receivable, it is considered an inflow of cash. According to the categorization used in the SOCF, collecting principal on notes receivable typically falls under Investing activities because it is related to the investment a company has made in the form of loans provided to others, and now the principal amount is being returned.
The inflow/outflow from collecting principle on notes receivable falls under Investing activities in the Statement of Cash Flows (SOCF).
The investing activities section of the SOCF records the cash flows related to the acquisition or disposal of long-term assets, including investments in notes receivable. When a company collects principle on notes receivable, it is receiving cash for an investment it made, which is considered an inflow in the investing activities section.
Therefore, the correct answer is B. Investing activities.