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Chapter_1_Addition - operating activities 2 Financing...

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Statement of Cash Flows The Statement of Cash Flows provides financial information about the Sources and Uses of a company’s cash. In other words, it accounts for the increase or the decrease in the cash balance and it details from what sources that increase or decrease arose. It classifies the increase or decrease into three categories: 1. Operating Activities Cash inflows (sources) and cash outflows (uses) associated with the primary operations of the business. The prime examples would be the cash outflow from the purchase of inventory and the cash inflow from the sale of inventory, however, all inflows and outflows from the “core business” are categorized in
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Unformatted text preview: operating activities. 2. Financing Activities Cash inflows (source) from sources that are funding the business such as the sale of stock, or the sale of bonds, or other borrowings. Also, cash outflows (uses) from the repayment of debt, or the payment of dividends on stock. 3. Investing Activities Cash outflow (uses) from the purchase of resources needed in operating the business (excluding inventory). This will include machinery, office equipment, land buildings etc. Also, the cash inflow (source) from the sale of resources used in the operation of the business (excluding inventory)....
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