In the statement of cash flows for an enterprise fund, which activity would include proceeds from sale of revenue bonds for construction?

• A. Operating activities
• B. Financing activities
• C. Investing activities
• D. Noncapital financing activities

Answer: (B)

Proceeds from issuing revenue bonds for construction are financing activities because they represent borrowing to fund capital projects. In an enterprise fund’s cash flow statement, financing activities include cash inflows and outflows related to debt issuance and repayments used to finance capital assets. They are not operating activities, which reflect day-to-day service provision, nor investing activities, which cover purchases and sales of investments or capital assets. They also aren’t noncapital financing activities, which pertain to financing for noncapital purposes. So the debt proceeds for construction belong in the financing activities section.