Riley Company borrowed $40,000 on April 1, Year 1 from the Titan Bank. The note issued by Riley carried a one year term and a 7% annual interest rate. Riley earned cash revenue of $1,060 in Year 1 and $1,500 in Year 2. Assume no other transactions.

The amount of cash flow from operating activities that would appear on the Year 2 statement of cash flows would be:

Multiple Choice

• $800 inflow

• $1,300 outflow

• $40,800 outflow

• $1,500 inflow