Operating, Investing, and Financing Activities

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16 Terms

1
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Operating Activites

include cash activities related to net income. For example, cash generated from the sale of goods (revenue) and cash paid for merchandise (expense) are operating activities because revenues and expenses are included in net income.

2
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Investing Activities

include cash activities related to noncurrent assets. Noncurrent assets include (1) long-term investments; (2) property, plant, and equipment; and (3) the principal amount of loans made to other entities. For example, cash generated from the sale of land and cash paid for an investment in another company are included in this category. (Note that interest received from loans is included in operating activities.)

3
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Financing Activites

include cash activities related to noncurrent liabilities and owners' equity. Noncurrent liabilities and owners' equity items include (1) the principal amount of long-term debt, (2) stock sales and repurchases, and (3) dividend payments. (Note that interest paid on long-term debt is included in operating activities.)

4
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Cash payments for purchases of merchandise

Operating

5
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Cash receipts from sale of common stock

Financing

6
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Cash payments for equipment

Investing

7
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Cash receipts from sales of goods

Operating

8
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Cash dividends paid to shareholders

Financing

9
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Cash payments to employees

Operating

10
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Cash payments to lenders for interest on loans

Operating

11
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Cash receipts from collection of principal for loans made to other entities

Investing

12
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Cash receipts from issuance of bonds

Financing

13
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Cash receipts from collection of interest on loans made to other entities

Operating

14
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Rent

Operating

15
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Equitment

Investing

16
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Dividens

Financing