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Financing Activities definitions

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  • Financing Activities
    Section of the cash flow statement focused on changes in long-term liabilities and equity, tracking cash inflows and outflows from funding sources.
  • Long Term Liabilities
    Obligations due beyond one year, such as bonds or notes payable, that impact the financing section of the cash flow statement.
  • Equity
    Ownership interest in a company, including common stock and retained earnings, affected by financing transactions.
  • Bonds Payable
    Debt instruments issued by a company to raise cash, with principal repayments classified as financing outflows.
  • Notes Payable
    Written promises to pay a specific amount, often to banks, with cash inflows from issuance and outflows from principal repayment.
  • Treasury Stock
    Previously issued shares repurchased by the company; selling or purchasing affects cash flows in the financing section.
  • Dividends Payable
    Current liability representing declared but unpaid dividends, relevant for determining cash outflows in financing activities.
  • Retained Earnings
    Cumulative net income minus dividends declared, used to track changes in equity and calculate dividends paid.
  • Dividends Declared
    Amounts approved by the board to be distributed to shareholders, increasing dividends payable but not always reflecting cash paid.
  • Dividends Paid
    Actual cash distributed to shareholders, recorded as a financing outflow in the cash flow statement.
  • Principal Repayment
    Return of the original amount borrowed on bonds or notes, classified as a cash outflow in financing activities.
  • Issuing Equity
    Process of selling ownership shares, such as common stock, to raise cash, resulting in a financing inflow.
  • Cash Flow Statement
    Financial report summarizing cash inflows and outflows from operating, investing, and financing activities.
  • T Account
    Visual tool used to analyze changes in accounts like retained earnings and dividends payable for cash flow calculations.