Cash flows from investing activities are the cash transactions involving acquisitions and disposal of non-operating asset which include the following: (1) Cash payment to acquire property, plant and equipment which include those relating to capitalized development cost and self-constructed property, plant and equipment. (2) Cash receipts from sale of property , plant and equipment, intangibles and other long-term assets. (3) Cash payments to acquire equity or debt instruments of other enterprises and interest in joint ventures (other than payments for those instruments considered to be cash equivalents or those held for dealing or trading purposes). (4) Cash receipts from sale of equity or debt equity or debt instruments of other enterprises and interest in joint ventures (other than receipts fort those instruments considered to be cash equivalents or those held for dealing or trading purposes). (5) Cash advances and loans made to other parties (other than advances and loan made by a financial institution). (6) Cash receipts from the repayment of advances loans made to other parties (other than advances and loans of a financial institution). (7) Cash payments for future contracts, forward contracts, option contracts and swap contracts except when the contracts are held for dealing or trading purposes or the payments are classified as financing activities. (8) Cash receipts from future contracts, forward contracts, option contracts, and swap contracts except when the contracts are held for dealing or trading purposes or the receipts are classified as financial activities.
According to the author of a book that I have read, when a contract is accounted for as a hedge of an identifiable position, the cash flows of the contract are classified in the manner as the cash flows of the position being hedged.
With this method, enterprises are encouraged to report major ca=lasses of cash receipts and gross payments from operating activities.
Classes of cash receipts and payments should be separately reported at a minimum as follows: Cash receipts from sale of goods and rendering of services; Cash receipts from interest and dividends; Cash receipts from other operating activities such as royalties, fees, commissions and other revenues; Cash payments to suppliers for goods and services; Cash receipts and cash payments of an enterprise’s insurance premium and claims, annuities and other policy benefits; Cash payments or refunds of income taxes unless they can be identified with financing and investing activities; Cash payment for interest and Cash payments and receipts from contracts held for dealing or trading purposes.
This method has its principal advantage that shows operating cash receipts and payments. Knowledge of the specific sources of cash receipts and purposes for which cash payments were made in past periods may be useful in assessing future cash flows.
Besides, the International Accounting Standards encourages, but does not require the use of this method.
Operating Activities is one of the three classification of cash flows in which in general the cash effects of transactions and other events relating to operating or trading activities.
Net cash flow from operating activities shows the net increase or decrease in cash resulting from the operations shown in the income statement in arriving at operating profit.
Under operating activities, there are two methods of reporting net cash flow as follows:
1. Direct Method – shows operating cash receipts and payments (including, in particular, cash receipts from customers, cash payments to suppliers and cash payments to and behalf of employees), aggregating to the net cash flow from operating activities.
2. Indirect Method – starts with profit before tax and adjusts it for non-cash charges and credits to reconcile it to the net cash flow from operating activities.
Cash Flows of business transactions of a business entity is presented in a Cash Flows Statement which aims to present information about the historical changes in cash and cash equivalents of an entity during the period classified by operating, investing and financing activities.
According to the author of the book that I have read recently, the information stated above is particularly useful to investors, creditors and other uses of financial statements to assist with the following: (1) evaluating an entity’s ability to generate cash and cash equivalents, and the timing and certainty of their generation; (2) evaluating an entity’s financial structure and its ability to meet its obligations and to pay dividends; (3) understanding the reasons for the difference between profit or loss for a period and the net cash flow from operating activities; (4) comparing the performance of different entities, because net operating cash flows reported in cash flow statements are unaffected by different accounting choices and judgments under accrual accounting use in determining the profit or loss of an entity; and (5) enabling its users to develop models to assess and compare the present value of the future cash flows of different entities.
Have you experience yet the Bulihan Festival in Sampaloc, Quezon? With this, join the residents of Sampaloc town in Quezon Province as they will lay the groundwork for the 4th Bulihan Festival scheduled from April 23 to 26, 2014
Thanks to Mayor Emmanuel S. Torres, who vigorously campaigned to highlight the Bulihan Festival. “This is something I want to highlight in our municipality: the importance of the Bulihan Festival. Through this festival, we give jobs to our residents, and we are able to promote tourism. There’s so much fun and excitement here. I hope they will visit us soon. Discover Sampaloc now!” Torres declared.
Besides, there is a full list of exciting activities at Sampaloc beginning on April 23 with the display of native delicacies in a program dubbed “Lutuing Sampalukin.” 14 barangays from Sampaloc are taking part in the food show. On April 24, the Payas Contest will be held, wherein houses along the parade route are encouraged to decorate the exteriors of their homes with colorful buri and other indigenous materials. The theme for this year’s festivity is “Blooming Sampaloc,.’ Forty-six houses are vying for cash prizes. On April 25, the Paradang Bayan 2014 will take place, followed by the awarding of the Search for Natatanging Anak ng Sampaloc. On April 26 comes the Lunesan ng Fiesta sa Ilog to be held on the Maapon River in Kakati, where residents will join in a boat race and hold picnics by the river.
Mayor Torres encouraged constituents to invite their friends from all over the country to join in the festival’s events. In promoting the fiesta, the local government has launched a homestay program where the residenst of Sampaloc “adopt” visitors for the duration of the event.
Want to experience Sampaloc, Quezon? Tour packages are available. For details, call Tina Poblete of the Sampaloc Municipal Planning and Development Office at (042) 555-83-42 and (042) 716-0011, or e-mail firstname.lastname@example.org, email@example.com, and firstname.lastname@example.org.