Question

How does 2019 Cash Flow from Financing Activities compare to prior years? What items shown on the statement show significant changes?

Answer 1

A) For comparing the cash flow statement from that of any prior years , we need to prepare CASH FLOW STATEMENT of the both the years that will be compared correctly.

This can be explained well by the example given below-

Through the diagram it is very much easy to do all the needful comparison.

B) During the life of an entity, it needs money for long term investments as well as for working capital purpose. Company can raise capital by the ways of loans or equity. Thus the cash flow related to raising funds and redemption of funds will be covered under CASH FLOW from FINANCIAL ACTIVITIES.

Cash Inflow from Financial Activity	Cash Outflow from Financial Activity
Cash proceeds from issuing shares or other equity instruments.	Cash payments to owners to acquire or redeem the entity’s shares.
Cash proceeds from issuing debentures,loans, notes,bonds,mortages and other .	Cash repayments of amounts borrowed.
Short-term or long-term borrowings	Cash payments by a lessee for the reduction of outstanding liability relating to a lease.

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