{"id":5133,"date":"2014-10-27T08:02:23","date_gmt":"2014-10-27T06:02:23","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=5133"},"modified":"2014-10-26T08:02:57","modified_gmt":"2014-10-26T06:02:57","slug":"disclosing-loan-payables-on-the-statement-of-cash-flows","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/disclosing-loan-payables-on-the-statement-of-cash-flows\/","title":{"rendered":"Disclosing loan payables on the statement of cash flows"},"content":{"rendered":"

Money that you\u2019re lending from someone is extra funding you\u2019re getting for your business, for your company. It\u2019s essentially called \u2018external capital\u2019 \u2013 external since it\u2019s not paid into the company by the owners and capital since it\u2019s funds given to be used either for investing, for financing everyday activities etc. It\u2019s also said that a healthy company is using about 2\/3 of \u2018external capital\u2019 and 1\/3 of its own capital (that is capital paid into and not taken out as dividends by the owners).\u00a0<\/p>\n

Regardless however, the question of where you would disclose those cash flows on your company\u2019s statement of cash flows when presenting one. Loans received are not part of your income statement and moreover, they are not connected to operations as such, at least not directly.<\/p>\n

If you think about it, money borrowed is supporting your operations, so it\u2019s not directly cash flows from operating activities, but financing activities, since as the word \u2018financing\u2019 means, you\u2019re getting money to use it for something. That is, your company\u2019s business operations are being financed.<\/p>\n

So in short, money borrowed (inflow of cash) and loans repaid (outflow of cash) are always shown as part of cash flows from financing activities.<\/p>\n","protected":false},"excerpt":{"rendered":"

Money that you\u2019re lending from someone is extra funding you\u2019re getting for your business, for your company. It\u2019s essentially called \u2018external capital\u2019 \u2013 external since it\u2019s not paid into the company by the owners and capital since it\u2019s funds given to be used either for investing, for financing everyday activities etc. It\u2019s also said that […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[],"class_list":["post-5133","post","type-post","status-publish","format-standard","hentry","category-4-5-statement-of-cash-flows"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t