Monday, August 6, 2012

Financing Activities

The Financing Activities are those transactions between the entity and its owners or creditors.

The primary focus of financing activities is to raise working capital necessary to be used in business operations.  The owners invest to the entity and/or creditors lend capital to the entity.

The transactions involving financing activities and their effects in the cash flows are as follows:

A.   Transactions which increases cash (cash receipts)
  1. Owner's investments
  2. Borrowings

B.   Transactions which decreases cash (cash payments)
  1. Owner's drawings
  2. Payments of borrowings












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