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In: Accounting

Talk briefly about the sections of statement of cash flows.

Talk briefly about the sections of statement of cash flows.

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Section of Cash Flow Statements:
a. Cash flow from Operating Activities
b. Cash flow from investing activities
c. Cash flow from Financing activities
a. Cash flow from Operating Activities
Operating activities include cash activities related to net income.
This section details the cash that comes from sale of goods service, less cash what goes out
to make and sell those goods and services.
Example:
Cash receipts from customers.
Interest income received in cash
Dividend income received in cash.
Cash received as a result of the settlement of litigation
b. Cash flow from investing activities
Investing activities include cash activities related to noncurrent assets. the principal amount of loans made to other entities
Noncurrent assets include (1) long-term investments; (2) property, plant, and equipment; and (3)  
This section largely reflects the amount of cash the company has spent on capital expenditures,  
such as new equipment or anything else that needed to keep the business going.  
It also includes acquisitions of other businesses and monetary investments such as money market funds.
Example:
Proceeds from sale of fixed assets (sale of equipment, machinery and plant etc.)
Proceeds from sale of land
Cash paid to purchase fixed assets (purchase of equipment, machinery and plant etc.)
Cash paid to purchase land
c. Cash flow from Financing activities
Financing activities include cash activities related to noncurrent liabilities and owners’ equity.  
Noncurrent liabilities and owners’ equity items include (1) the principal amount of long-term debt, (2) stock sales and repurchases, and (3) dividend payments
This section describes the goings-on of cash associated with outside financing activities.  
Typical sources of cash inflow would be cash raised by selling stock and bonds or by bank borrowings.  
Likewise, paying back a bank loan would show up as a use of cash flow, as would dividend payments and common stock repurchases.
Example:
Cash received from borrowings (both short and long term).
Cash received from issuing of common or preferred stock.
Payment of borrowings to others (principle amount only).
Payment of cash dividends to the stockholders.

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