Asked by Falantina Rashoo on May 09, 2024
Verified
Preparing the financing activities section of the statement of cash flows requires the analysis of non-current liability and equity accounts, as well as any short-term loans incurred for lending purposes rather than trade.
Financing Activities
Transactions that result in changes in the size and composition of the equity capital or borrowings of the entity, as reported in a company’s cash flow statement.
Non-current Liability
Liabilities that are not due within the next twelve months, such as long-term loans, bonds payable, and deferred tax liabilities.
Short-term Loans
Loans scheduled to be repaid in less than a year, typically used for immediate cash flow needs or small-scale expenses.
- Distinguish between cash flows from operating, investing, and financing activities.
- Analyze the implications of specific transactions on the statement of cash flows.
Verified Answer
KA
Khaled AshrafMay 13, 2024
Final Answer :
True
Explanation :
The financing activities section of the statement of cash flows includes transactions involving non-current liabilities and equity accounts, such as issuing or repaying debt and equity, as well as short-term loans if they are for financing rather than operational purposes.
Learning Objectives
- Distinguish between cash flows from operating, investing, and financing activities.
- Analyze the implications of specific transactions on the statement of cash flows.