31
Financing Activities- Changes in long-term liabilites and stockholder's equity
Cash inflows:
From sale of common stock
From issuance of debt (bonds and notes)
Cash outflows
To stockholders as dividends
To redeem long- term debt or reacquire capital stock
Table 2.8: Cash From Financing Activities
From: Accounting Principles, 2005
2.4 Two Formats of Reporting Statement of Cash Flow.
According
to IAS 7 paragraph 18 (International Financial Reporting Standard 2005),
an entity shall report their cash flow from operating activities using either direct or
indirect
method.
Additionally,
according
to Horngren
et
al
(2007,
p.786),
the
direct
method
records
all
the
cash
receipts
and
payments
from
operating
activities,
while
the indirect method is the method “which reconciles all the cash receipts and all the
cash
payments
from operating
activities”
such as
any
past
of
future
deferrals
or
accruals of operating cash receipts or payments and the income or expense items
involving either investing or financing cash flow activities. The following sections
will be discussing both the methods in more details.
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