1.

Explain- cash flow transactions of financing activities.

Answer»

Transaction of financing activities are dividend into two parts :

1. Cash inflow activites
2. Cash outflow activities.

1. Cash inflow of financing activities :

  • Issue of equity shares, preference shares and debentures,
  • Procurement of loan and creation of long term liabilities,
  • Increase in bank overdraft.

2. Cash outflow of financing activities :

  • Buy back of equity shares- Redemption of preference shares, debentures and loan or any other long term liabilities,
  • Dividend payment on equity share capital and preference share capital,
  • Reduction in bank overdraft – Interest paid on debt.


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