VCE Accounting

1. 12.7
FINANCING ACTIVITIES

2. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
12.7 FINANCING ACTIVITIES
Financing activities
Cash flows that result from changes in the firm’s financial
structure
• Capital contributions by the owner
• Drawings by the owner
• Borrowings (loans) from financial institutions
• Loans repayments

3. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Financing Activities
 It is acceptable to have either a
POSITIVE or NEGATIVE net cash
flow from Financing Activities
 A POSITIVE net cash flow is not
necessarily good because the
firm has either borrowed money
or the owner has contributed
capital
 These are short-term sources of
finance – loans incur interest
and the owner’s capital is
limited
 A NEGATIVE net cash flow is not
necessarily bad because the
firm is either repaying its loans
or the owner is withdrawing
their Owner’s Equity
12.7 FINANCING ACTIVITIES
Cash Flow Statement for the month ended 30 June 2015
$ $
Cash Flows from Financing Activities
Capital contributions 5000
Loan – NAB 15000
Drawings (10000)
Loan repayments (11000)
Net Cash Flow from Financing Activities (1000)

4. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Cash Flow Statement for the month ended 30 June 2015
$ $
Cash Flows from Financing Activities
Capital contributions 5000
Loan – NAB 15000
Drawings (10000)
Loan repayments (11000)
Net Cash Flow from FinancingActivities (1000)
Cash Flow Statement for the month ended 30 June 2015
$ $
Cash Flows from Financing Activities
Capital contributions 5000
Loan – NAB 15000
Drawings (10000)
Loan repayments (11000)
Net Cash Flow from Financing Activities (1000)
Cash Flow Statement for the month ended 30 June 2015
$ $
Cash Flows from Financing Activities
Capital contributions 5000
Loan – NAB 15000
Drawings (10000)
Loan repayments (11000)
Net Cash Flow from Financing Activities (1000)
Cash Flow Statement for the month ended 30 June 2015
$ $
Cash Flows from Financing Activities
Capital contributions 5000
Loan – NAB 15000
Drawings (10000)
Loan repayments (11000)
Net Cash Flow from Financing Activities (1000)
Section heading
Cash inflows
Listed before
outflows in 1st
column
Cash outflows
Listed after
inflows in 1st
columnSection ending
Listed in 2nd
column and
down a row
12.7 FINANCING ACTIVITIES

5. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
TASK
In-class Homework
Ex12.5 X
Ex12.6 X