This free, guided checker walks your finance team through the key decision points for ASC 230 Cash Flow Classification. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level US GAAP screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Noncash investing and financing activities are excluded from the body of the statement of cash flows and disclosed separately under ASC 230-10-50-3 through 50-6.
Exclude it from the body of the statement and disclose the noncash investing or financing activity under ASC 230-10-50-3 through 50-6.
Official guidance: FASB Accounting Standards Codification
Financing activities under ASC 230-10-45-14 and 45-15 include debt and equity issuance proceeds, debt principal repayments, share repurchases, dividends paid, and finance lease principal payments. Interest paid is an operating item, not financing.
Classify the cash flow within financing activities under ASC 230-10-45-14 through 45-15.
Official guidance: FASB Accounting Standards Codification
Investing activities under ASC 230-10-45-12 and 45-13 cover long-lived productive assets, loans made and collected, and most purchases, sales, and maturities of debt and equity instruments of other entities.
Classify the cash flow within investing activities under ASC 230-10-45-12 through 45-13.
Official guidance: FASB Accounting Standards Codification
Under US GAAP, interest paid, interest received, and dividends received are operating cash flows under ASC 230-10-45-16 and 45-17; only dividends paid to the entity's own shareholders are financing.
Classify the cash flow within operating activities under ASC 230-10-45-16 through 45-17.
Official guidance: FASB Accounting Standards Codification
ASC 230-10-45-22 requires each separately identifiable source or use within a single receipt or payment to be classified on its own; if the components cannot be separated, ASC 230-10-45-22A classifies the entire amount based on the predominant source or use.
Classify each identifiable component on its own under ASC 230-10-45-22, or classify the entire amount by its predominant source or use under ASC 230-10-45-22A. Classify the cash flow within operating activities as the residual class under ASC 230-10-45-16 through 45-17.
Official guidance: FASB Accounting Standards Codification
Cash equivalents are part of the cash total, so buying or selling them is not an investing cash flow; likewise, ASU 2016-18 keeps restricted cash inside the total, so transfers to or from a restricted account are not cash flows. Trace the movement to confirm both sides sit within the reported total. The common trap is presenting the purchase of a short-term Treasury bill or a transfer into escrow as an investing outflow.
A movement among the components of the cash, cash equivalents, and restricted cash total is not a cash inflow or outflow under ASC 230-10-45-4 through 45-5. Transfers between restricted and unrestricted cash that are both in the total are not reported as cash flows under ASC 230-10-45-4; disclose the reconciliation under ASC 230-10-50-8.
Official guidance: FASB Accounting Standards Codification
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