Examine the process activities and transactions for the financial management process shown in Figure 13-6.

a. Using the example transactions listed in the same figure, describe which transactions or estimates are impacted by the different activities listed in the process.

b. Describe which accounts are impacted by the each of the transactions.

Figure 13-6

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Process Objectives Prepare accurate budgets and financial reports on a timely basis. Optimize capital structure given current economic environment. Minimize cost of capital over long term. Maximize return from investments for a given level of risk tolerance. Manage cash flows to meet obligations on a timely basis. Comply with obligations and terms of financing contracts. Capture, process, and report information necessary for process improvement. Process Activities Planning and budgeting Borrow Debt funds Service Evaluate financing options. Dividends Manage Issue Equity and equity repurchase cash flow Evaluate investment options Information Feeds Manage investments Process Data Streams Strategic plan and budgets Financing sources and potential lenders Financial market data including stock prices, bond yields, and derivative product availability Capital budgets Cash flow requirements Financial asset levels Stock compensation plans Routine Transactions Line of credit Notes payable Debt payments Interest Dividends Investments* Sale of investments Investment earnings Exercise of options Investment earnings Information Generation Budgets and forecasts Investment transactions Borrowing transactions Risk assessments associated with investing and borrowing especially related to derivative transactions Equity transactions Investment performance Cost of capital Debt contracts and covenants Financial reports Accounting Impact of Activities Non-routine Transactions Bonds payable Debt retirement Equity issues Equity repurchase Option grants Mergers and acquisitions Accounting Estimates Impairment of investments Stock compensation Cost allocation for mergers.