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CFI vs CFF

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › CFI vs CFF

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by AvatarJohn Moffat.
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  • Author
    Posts
  • February 16, 2016 at 1:26 pm #300693
    Avatarmp-open
    Member
    • Topics: 96
    • Replies: 167
    • ☆☆☆

    Hallo,

    I read in a BPP ACCA book the following:

    “Loans and other borrowings from banks are classified as investing activities. In some countries, however, bank overdrafts are repayable on demand and are treated as part of an enterprise’s total cash management system. In these circumstances an overdrawn balance will be included in cash and cash equivalents. Such banking arrangements are
    characterised by a balance which fluctuates between overdrawn and credit.”

    – isn’t there a mistake when they say that: Loans and other borrowings from banks are classified as investing activities – because for me this is financing activities, is that I don’t understand something?

    And because in the book just before that investing and financing activities are defined as:

    -> Investing activities are the acquisition and disposal of non-current assets and other investments not included in cash equivalents.
    -> Financing activities are activities that result in changes in the size and composition of the equity capital and borrowings of the entity.

    Thank you!

    February 16, 2016 at 8:20 pm #300728
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54848
    • ☆☆☆☆☆

    If you have copied it correctly then it would appear that they are wrong.

    Loans and other borrowings from banks are indeed financing activities 🙂

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