Financing Activities | Accounting

Financing Activities are activities that result in changes in the size and composition of owners’ capital (including Financing Activitiespreference shares in the case of company) and borrowings of the enterprise. Financing activities are part of Cash Flow Statement. Copy the link given below and paste it in new browser window to get more information on Financing Activities:- www.transtutors.com/homework-help/accounting/financing-activities.aspx

1. FINANCING ACTIVITIES

2. What is financing activity? Any transaction which change the capital structure of the company and that involves borrowing/repayment of fund is treated as financing activities. For example, Issue of Equity / Preference shares of the company Issue of Debentures of the company Borrowing from Banks & Financial Institutions Any transaction which is directly related to capital and debt of the company is also covered under financing activities. For example, Payment of dividend to share holders Payment of interest on loans or debentures

3. What is Cash Flow Statement? Cash flow is a statement that represents sources and utilisation of cash and cash equivalents For user of financial statements, it is important to know how the cash is generated by the company and where it is utilised Cash flow is systematic and categorised presentation of cash inflow and cash outflow for specified period.

4. Divisions of cash flow statement Cash flow is divided in three types of activities Operating Activities Investing Activities Financing Activities

5. Items covered under financing activities Sources of Cash Proceed from issue of common stock Proceed from issue of preferred stock Proceed from issue of bonds & debentures Loans form banks & FIs

6. Items covered under financing activities Utilisation of Cash Buyback of common stock Redemption of preferred stock Redemption of bonds & debentures Repayments of loans & borrowings Payment of final or interim dividend Payment of interest on loans & borrowings

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