Classification of Cash Flows

 

Cash Flow Statement

The Cash Flow Statement is a statement that defines the cash and cash equivalent inflows (sources) and outflows (uses) of an entity for a given period of time.



Cash flows are thus divided into three major categories:


  1. Operating activities
  2. Investing activities
  3. Financing activities

Operating activities


Cash flow from operations is the first of the three elements of the cash flow statement that indicates in an accounting year the cash inflows and outflows from core corporate business. Cash obtained from purchases covers operating expenses. For working capital financing, cash spending charged for related expenses as well as reimbursement is made.


Investing activities


Cash activities related to non-current assets include investment activities and`   Include non-current properties


(1) savings over the long term;

(2) the land, the plant and the facilities; and (2)

(3) the principal sum of the loans to other institutions made. In this grouping, for instance, the capital created by the selling of land and cash-paying for an acquisition in another business are included.


Financing activities


Cash Flow from Financing Activities is the net volume of funding a company receives in a given timeframe. The operations of finance include equity issuance and redemption, dividend payout, loan issuance and repayment, and capital lease responsibilities. By offering loans or shares, businesses that need funding will collect funds, and this will be expressed in the cash flow statement. 

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Resources:


1. https://clearcollectiveposts.tumblr.com/post/643916867552116736/classification-of-cash-flows

2. https://12shanzarao.medium.com/classification-of-cash-flows-c93ccc57c3f5

3. https://gumroad.com/accotaxlondon1/p/classification-of-cash-flows

4. https://ext-5636255.livejournal.com/3333.html

5. https://12shanzarao.wixsite.com/my-site

6. https://cashflowaccotax.weebly.com/

7. https://accountantsforsmallbusinesses.wordpress.com/2021/02/23/classification-of-cash-flows/


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