Statement of Cash Flows

Categories for Classifying Cash

Transactions
Use the following four categories of activities to classify cash transactions:

 Operating
 Noncapital financing
 Capital and related financing
 Investing

Generally, cash receipts and cash payments are reported as gross rather than net. Two
exceptions to the gross reporting are:

 Cash purchases and sales of cash and cash equivalents

 Assets and liabilities for which the turnover is quick and the maturities are three
months or less (such as debt, loans receivable and the purchase and sale of
highly liquid investments)

I. Cash Flows from Operating Activities

Cash flows from operating activities result from providing services and producing
and delivering goods. They include all other transactions not defined as
noncapital financing, capital and related financing or investing activities. The
operating activities section is, in a sense, a “catch-all” category.
Cash inflows (proceeds) from operating activities include:

o Cash receipts from sales of goods and services including receipts from
collection of accounts receivable and both short/long-term notes
receivable from customers and students arising from those sales
o Cash receipts from quasi-external operating transactions with other funds
o Grant receipts for activities considered as operating activities of the
grantor government
o Cash receipts for reimbursement of operating transactions
o Cash receipts from collection of program loans

Note: “Program loans” are loan programs undertaken to fulfill a

governmental responsibility (such as low-income housing mortgages and
student loans). As the loans made and collected (including the interest)
are part of a governmental program, the loan activities are reported as
operating activities, rather than investing activities.
 o Cash contributions to a defined benefit pension plan administered through
a trust that meets the criteria in GASB 68, paragraph 4, or to a defined
benefit OPEB plan administered through a trust that meets the criteria
in GASB 75, paragraph 4.
o Other cash receipts not classified in the other categories.

Cash outflows (payments) from operating activities include:

o Cash payments to suppliers of goods and services

o Cash payments to employees for services including benefits

Note: Separate accounts payable and payroll payable when determining

the cash payments.

o Cash payments for grants considered to be operating activities of the

grantor
o Cash payments for quasi-external operating transactions (including
payments in lieu of taxes)
o Cash payments for program loans
o Cash payments for pensions or OPEB regardless of whether the defined
benefit pension plan or defined benefit OPEB plan is administered through
a trust that meets the specified criteria of either GASB 68, paragraph 4,
or GASB 75, paragraph 4, respectively.
o Other cash payments not classified in the other categories
II. Cash Flows from Noncapital Financing Activities

Cash flows from noncapital financing activities include borrowing money and
repaying the principal and interest on amounts borrowed for purposes other than
to acquire, construct or improve capital assets.
Cash inflows (proceeds) from noncapital financing activities include:

o Cash receipts from short and long-term borrowings used for purposes
other than to acquire, construct or improve capital assets
o Cash receipts from grants and voluntary non-exchange transactions (gifts)
not used for capital assets or for specific activities considered to be
operating activities of the grantor
o Cash receipts from other funds except amounts used for capital assets,
quasi-external operating transactions or reimbursement for operating
transactions
o Cash receipts from property and other taxes not specifically restricted for
capital purposes
o Cash receipts from proceeds of state appropriations

Cash outflows (payments) for non-capital financing activities include:

o Repayments of principal and interest on borrowings for purposes other

than acquiring, constructing or improving capital assets
 o Grant payments to other governments or organizations for activities not
considered as operating activities of the grantor

Note: It is irrelevant whether the grantee uses the grant as an operating

subsidy or for capital purposes.

o Cash payments to other funds except for quasi-external operating

transactions
III. Cash Flows from Capital and Related Financing Activities

Cash flows from capital and related financing activities include acquiring and
disposing of capital assets, borrowing money to acquire, construct or improve
capital assets, repaying the principal and interest amounts and paying for capital
assets obtained from vendors on credit.
Cash inflows (proceeds) from capital financing activities include:

o Receipts from proceeds of issuing or refunding bonds and other short or

long-term borrowings used to acquire, construct or improve capital assets
o Receipts from capital grants awarded to the governmental enterprise or
other contributions for capital assets
o Receipts from contributions made by other governments, organizations or
individuals (gifts) for the specific purpose of defraying the cost of
acquiring, constructing or improving capital assets
o Receipts from sales of capital assets and proceeds from insurance on
capital assets that are stolen or destroyed
o Receipts from special assessments or property and other taxes levied for
capital purposes

Cash outflows (payments) for capital financing activities include:

o Payments to acquire, construct or improve capital assets

o Payments on principal and interest or refunding on amounts borrowed for
capital assets

Note: Proceeds of a refunding debt issue used to refund capital debt are

reported in the capital and related financing category. Likewise,
subsequent principal and interest payments on the refunding debt are also
reported as cash outflows in the capital and related financing category.

IV. Cash Flows from Investing Activities

Cash flows from investing activities include making and collecting loans (except
program loans; see Cash Flows from Operating Activities) and the
acquisition and disposition of debt or equity instruments.
Cash inflows (proceeds) from investing activities include:
 o Receipts from collections of loans (except program loans) and sales of
other entities’ debt instruments (other than cash equivalents)
o Receipts from sales of equity instruments and from returns of investment
in those instruments
o Receipts of interest and dividends received as returns on loans (except
program loans), debt instruments of other entities, equity securities and
cash management or investment pools
o Receipts from withdrawals on investment pools the governmental
enterprise is not using as demand accounts

Cash outflows (payments) for investing activities include:

o Payments for loan disbursements (except program loans) and acquisition

of debt instruments of other entities
o Payments to acquire equity instruments
o Payments for deposits into investment pools the governmental enterprise
is not using as demand accounts