{"id":646,"date":"2018-04-19T20:30:45","date_gmt":"2018-04-19T20:30:45","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/?post_type=chapter&#038;p=646"},"modified":"2024-04-29T17:36:00","modified_gmt":"2024-04-29T17:36:00","slug":"financing-activities","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/chapter\/financing-activities\/","title":{"raw":"Financing Activities","rendered":"Financing Activities"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Identify cash flows that result from financing activities<\/li>\r\n<\/ul>\r\n<\/div>\r\nSo the third part of the cash flow statement involves financing activities. If a company borrows money, this is a financing activity. There are some inflows from financing activities including borrowing money or selling common stock. Outflows from financing activities include paying the principal part of debt (a loan payment), buying back your own stock or paying a dividend to investors.\r\n\r\nReady to jump in? Let's start with this video explanation:\r\n\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=7494714&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=O3Kr92zZdWo&amp;video_target=tpm-plugin-5tnsm4w3-O3Kr92zZdWo\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n\r\nIf a company borrows money, the entire amount of the cash comes in at one time, right? So that entire amount will be reflected on your cash flow statement.\r\n\r\nLet\u2019s look at inflows and outflows from financing activities:\r\n<table style=\"height: 105px;\" border=\"1\">\r\n<tbody>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\"><strong>Description<\/strong><\/td>\r\n<td style=\"height: 15px;\"><strong>Inflow<\/strong><\/td>\r\n<td style=\"height: 15px;\"><strong>Outflow<\/strong><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Borrow money<\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Repay the principal amount on a loan<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Sell your own common stock<\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Buy back your own common stock<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"height: 15px;\">Pay a stockholder dividend<\/td>\r\n<td style=\"height: 15px; text-align: center;\"><\/td>\r\n<td style=\"height: 15px; text-align: center;\">X<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nCan you think of any other activities that may be considered financing activities? If you look at your personal expenditures, a car loan or mortgage might be a financing activity!\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Questions<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/05a42769-ece4-4eb1-8b4e-b9db09c2a0ad\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Identify cash flows that result from financing activities<\/li>\n<\/ul>\n<\/div>\n<p>So the third part of the cash flow statement involves financing activities. If a company borrows money, this is a financing activity. There are some inflows from financing activities including borrowing money or selling common stock. Outflows from financing activities include paying the principal part of debt (a loan payment), buying back your own stock or paying a dividend to investors.<\/p>\n<p>Ready to jump in? Let&#8217;s start with this video explanation:<\/p>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=7494714&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=O3Kr92zZdWo&amp;video_target=tpm-plugin-5tnsm4w3-O3Kr92zZdWo\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p>If a company borrows money, the entire amount of the cash comes in at one time, right? So that entire amount will be reflected on your cash flow statement.<\/p>\n<p>Let\u2019s look at inflows and outflows from financing activities:<\/p>\n<table style=\"height: 105px;\">\n<tbody>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\"><strong>Description<\/strong><\/td>\n<td style=\"height: 15px;\"><strong>Inflow<\/strong><\/td>\n<td style=\"height: 15px;\"><strong>Outflow<\/strong><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Borrow money<\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Repay the principal amount on a loan<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Sell your own common stock<\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Buy back your own common stock<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"height: 15px;\">Pay a stockholder dividend<\/td>\n<td style=\"height: 15px; text-align: center;\"><\/td>\n<td style=\"height: 15px; text-align: center;\">X<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Can you think of any other activities that may be considered financing activities? If you look at your personal expenditures, a car loan or mortgage might be a financing activity!<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Questions<\/h3>\n<p>\t<iframe id=\"assessment_practice_05a42769-ece4-4eb1-8b4e-b9db09c2a0ad\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/05a42769-ece4-4eb1-8b4e-b9db09c2a0ad?iframe_resize_id=assessment_practice_id_05a42769-ece4-4eb1-8b4e-b9db09c2a0ad\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-646\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Financing Activities. <strong>Authored by<\/strong>: Freedom Learning Group. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Cash Flow from Financing Activities (Statement of Cash Flows). <strong>Authored by<\/strong>: Edspira. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=O3Kr92zZdWo\">https:\/\/www.youtube.com\/watch?v=O3Kr92zZdWo<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":62559,"menu_order":6,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Financing Activities\",\"author\":\"Freedom Learning Group\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"Cash Flow from Financing Activities (Statement of Cash Flows)\",\"author\":\"Edspira\",\"organization\":\"\",\"url\":\"https:\/\/www.youtube.com\/watch?v=O3Kr92zZdWo\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"}]","CANDELA_OUTCOMES_GUID":"be938171-ebc9-47a7-9bb9-5e222a8d47bb, ed73eeba-216c-4dd0-b823-a534445168a8","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-646","chapter","type-chapter","status-publish","hentry"],"part":112,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/users\/62559"}],"version-history":[{"count":12,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/646\/revisions"}],"predecessor-version":[{"id":4163,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/646\/revisions\/4163"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/parts\/112"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/646\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/media?parent=646"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapter-type?post=646"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/contributor?post=646"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/license?post=646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}