Question

Please provide your classmates with an example of one item for each of the three sections of the Statement of Cash Flows.

Answer 1

As we know, Statement of cash flows states about the changes in cash position of an entity.

Cash flows during a certain period can be classified into three categories, such as :

1) Operating Activities

2) Investing activities.

3) Financing Activities

*Operating Activities are referred as Principal revenue generatin activities of any enterprise.

**Investing Activities referred to Acquisition and disposal of Long term assets and other investments which are not included in cash equivalents

***Financing activities are often related to activities that results in the change in size and composition of owner's capital and borrowings of the enterprise.

Examples for Above three Activities are :

1) Operating Activities

* Cash Receipts from the sale of goods or rendering of services.

* Cash payments to the employees'

* Cash receipts from commission

* Cash payments for supplier of goods.

2) Investing activities.

* Purchase of an equipment

* Sale of long term asset

* Dividend received from investment made in subsidary company

3) Financing Activities

* Dividend paid for the year

* Issue of debentures

* Repayment of Debt

* Proceeds from issue of share capital