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FINANCING CYCLE

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The Financing Cycle

How does the financing cycle starts? Generally companies need to acquire debt or Click to edit Master subtitle style equity financing to make major capital expenditures

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The Financing Cycle

Processes transaction and events that generate capital funds

Uses resources and information provided by the Click to edit Master subtitle style expenditure/disbursement cycle and provides resources and information to the revenue/receipt cycle

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The Financing Cycle

Major Business Functions

Capital funds are received from investors and creditors Capital funds are used for operations or temporarily until needed for operations

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The Financing Cycle

Common Forms and Documents v Bond certificate v Commercial paper v Stock certificate v Treasury bill Click to edit Master subtitle style

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The Financing Cycle

Internal Control Considerations

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INVESTMENTS 1.)Marketable debt instruments and marketable equity securities (representing ownership, acquire ownership, dispose of ownership) 2.)Government obligations
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Optimizing financial return on idle cash

INVESTMENTS

FC processes transactions that convert internal resources into external investments, liquidating when necessary to convert investment into cash either for internal working capital needs or Click to edit Master subtitle style for alternative investments. Major Controls and Functions Related to Investment *Custody, Recording, Valuation *Acquisitions, Sales and Income
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DEBT

Long-term debt (bond or a commercial bank loan) to raise capital funds for internal investments
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FC processes debt incurrence and retirement transactions, directing the resources through the revenue/receipt and expenditure/disbursement cycles respectively
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DEBT

Common Activities

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*All debt instruments should be accounted for in detailed records, often

EQUITY

Equity securities ( common and preferred stocks) to raise capital funds for internal investing; capital Clickexpansion to edit Master subtitle style

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EQUITY

Common Activities

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Detailed Records might include shareholders ledger, transfer journal,

SUMMARY

Common Activities

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