## Cash Flow from Financing Activities
Financing activities are those that result in changes in the size and composition of the owner's capital and borrowings of the enterprise.
### Common Items — Financing Activities
| Item | Direction | Note |
|---|---|---|
| Proceeds from issue of shares (equity / preference) | + Inflow | Gross amount |
| Proceeds from issue of debentures / bonds | + Inflow | Gross amount |
| Loans / borrowings raised | + Inflow | New borrowing |
| Repayment of loans / borrowings | − Outflow | Principal only |
| Redemption of debentures | − Outflow | Principal repaid |
| Premium paid on redemption | − Outflow | Separate from principal |
| Dividends paid (for companies) | − Outflow | Paid ≠ declared |
| Drawings by proprietor / partner | − Outflow | Treated like dividends |
| Interest paid on borrowings | − Outflow | Cash actually paid |
### Key distinction: Drawings vs. Dividends
For a sole proprietor or partnership, the owner takes drawings instead of dividends. AS 3 treats drawings exactly like dividends paid for a company — both are classified under Financing Activities as an outflow. The rationale: both represent distribution of enterprise resources to the owner.
### Reconstructing debenture / loan accounts
To find proceeds from issue or repayment amount, prepare the liability ledger:
```
Long-term Borrowings (Debentures/Loan) Ledger
Cash repaid (bal fig) ××× | Opening balance ×××
Closing balance ××× | New proceeds ×××
```
### Dividends paid vs. dividends declared
Only dividends actually paid in cash during the year appear in CFS. Use a Dividend Payable ledger:
```
Dividend Payable Ledger
Cash paid (bal fig) ××× | Opening payable ×××
Closing payable ××× | Declared in P&L ×××
```