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What are some examples of financing activities on the cash flow statement?

Author:
Harold Averkamp, CPA, MBA

Definition of Financing Activities

Financing activities reported on the statement of cash flows (SCF) involve changes to the long-term liabilities, stockholders’ equity, and short-term borrowings during the period shown in the heading of SCF.

Examples of Financing Activities

Sources of cash provided by financing activities include:

  • Borrowing money on a short-term basis and/or long-term notes basis from a bank or other lenders
  • Issuing bonds payable
  • Issuing common stock
  • Issuing preferred stock
  • Sale of treasury stock
  • Other increases in long-term liabilities and stockholders’ equity

Uses of cash reported in the financing activities section of SCF include:

  • Repayment of short-term loans and/or long-term loans
  • Retirement of bonds payable
  • Purchase of a company’s own stock (treasury stock)
  • Declaration and payment of dividends
  • Other decreases in long-term liabilities and stockholders’ equity
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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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