Cash Flow Statement: Investing and Financing Activities (Financial Accounting Tutorial #70) NARRATOR: So I'm going to try and finish this cash flow statement within 10 minutes. All we need to do is report the long-term term assets or the investing activities and the financing activities, which are your bonds payable and common shares. So let's start off on the equipment assets. So we increased the balance of our equipment account by 30,000 year over year. So if we go to our cash flow statement-- our cash flow statement, I can actually first reduce the size of this so it's a little bit easier to work with. And then I'll write cash from investing activities so that we have a new section, cash from investing activities. So we have equipment. So I'm just going to say P for purchase of equipment, because if equipment went up by $30,000 we purchased or traded for it. So the equipment accounts-- I'm going to just write it up here, equipment, plus $30,000 you can treat this as an entry for a purchase, and a purchase would look something like this equipment and cash being the credit. So if I were to write use and source on the site, you can easily highlight that it is a use of cash. If you wanted to counter argue and say what if we use accounts payable, then we've already adjusted for that in the previous section in operating activities. If you said that we wanted to pay for it using notes payable, then notes payable would be included in our financing activities section that would be adjusted for as well. So we can safely assume that we used cash in this case. So I'm just going to write minus $30,000, and that's going to be a use of cash. So let me get rid of this, and I'm going to close this really quickly and bringing back up our balance sheets. And the next one is our land account, which has increased by $40,000. So you can probably think ahead and realize that if our land accounts increased by $40,000 then we've purchased land. So we'll have debited land and credited cash, because the same idea works in this scenario. If we used accounts payable, then we would have adjusted for it previously. If we used notes payable, we would have adjusted for it in the financing activities, which is coming up next. If we used common shares, that would be adjusted for. So even if it isn't cash, it would have been adjusted for if it was some other accounts being used in some other section. So you see the cash flow statement is very comprehensive and complex at times. You have to have a really, really good neat understanding of how the whole system works within the financial accounting and your business. So we can say purchase land. We know that is a use, $40,000. And then we can say cash from investing is going to actually be negative $70,000, negative $70,000. So that's the investing activities portion. If we move to the financing activities, we have bonds payable and common shares left to do. So first, we'll do bonds payable. Bonds payable went up by $40,000 from 2013 to 2014. So we're going to go back to our cash flow statement, and we're going to say cash from financing. And bonds payable, I actually forget how much it was, $40,000. So bonds payable increased by $40,000 use or a source. It's going to be a source of cash, because if we have bonds payable increasing by $40,000 normally we'll have received cash for like a bond issuance, a bond issue. And so if we issue bonds to bond holders, we're going to receive cash in return. And we'll have to provide them with their principal and interest back, so we can say that this is a source. So increased by $40,000, and then-- or I actually probably should have written this below should have said bonds payable issued, and that would be plus $40,000. And then our final account is actually going to be common shares for $50,000. It's increased 50,000 year over year. And the same thing is going to happen-- I can't find my layer. There it is. I've got a lot of popping up. I can't remember. I've got so many layers I'm working with. So common shares increased by $50,000. So common shares issued. So same idea as the bond payable or the-- you have the bonds payable or the bonds that we've issued. It's that we're going to receive cash for common shares that we've issued, and that's going to be a source, which I've left highlighted still over on the right hand side of $50,000. And then at the bottom, we can say cash from investing-- or not investing from financing is going to be $90,000. So that's the total there and that's the total there. And altogether we can say that the change in cash, which is normally going to go below but I don't have any space. So the change in cash is $120,000 minus $70,000 is $50,000 plus the $90,000 is $140,000. And the cash on our beginning was zero, and the cash at the end of our cash flow statement, which you can see on the balance sheet-- on the balance sheet is actually going to be the identical amount. It's $140,000. So that's a way you can always double check if your cash flow statement is correct if you've basically got to the end in cash balance and the change of cash is correct as well. That's a way to confirm that you've got the activities all sorted out correctly. So we can go back, and we can actually just finish it off by writing it in. So the ending in cash balance is going to be $140,000 as well. So there you have it. We have our operating activities. We have our investment activities, our financing activities, and then normally this would go below here. But we don't have enough room, so I'm just going to say change in cash, $140,000, cash beginning, zero since that was the inception of our company and the end is $140,000. Hopefully, you got all of that, and I think that's it for the cash flow statements series. I'm probably going to post an even a harder problem in the next day or so. So I'll see you guys then when I actually post that. If you have any questions regarding accounting or any of the material within our videos, you can tweet us at note pirate. You can like us on Facebook to receive updates or to share any quick anecdotes about how our videos might have helped. And like always, thanks for watching us on YouTube.