Question

In: Accounting

Discuss and provide examples of different types of cash flows as operating, investing, and financing activities.

Discuss and provide examples of different types of cash flows as operating, investing, and financing activities.

Expert Solution

Cash flow Statement is showing change in cash position of the company from one period to another.

Cash flow statement is divided into 3 category.

1. Operating Activity:

Operating Cash flow is showing cash flow of the company from revenue producing activities of the company and other activities that are not investing or financial activities.

Example of Cash flow from activities are.

a) Cash receipt from the sale of goods and the rendering service.

b) Cash receipt from fees, communication and other revenue.

c) Cash payment to suppliers for goods and services.

d) Cash payments to employee etc.

2. Investment Activity:

Cash flow from Investment Activities include acquisition and disposal of long term assets and other investment activity.

a) Cash payment to purchase fix assets including intangible assets like goodwill, patents etc.

b) Cash received from disposal of assets.

c) Interest received on investment in debenture and bonds.

d) Dividend received on investment in shares.

3. Financing Activities.

These are activities that shows flow of net cash flow that are used to fund the company.
It shows change in shareholders funds.

a) Cash proceed from issue of shares or other similar instruments

b) Cash proceeds from issue of Debenture, loan, notes , bonds and other long term borrowing.

c) cash repayment to debenture.

d) Buyback of shares.

e) dividend payments etc.

ekkarill92 answered 2 years ago

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