Omissions from your cash flow statement can skew your bookkeeping and eventually lead to misstating your income to the IRS. A cash flow statement is a chronological list detailing your cash inflows and outflows. Mortgage payments count as a cash outflow. If you refinance your mortgage, you must make sure not only to include it, but to properly represent the new payment. If you don't, your numbers will be inaccurate.
Write the header “Cash From Financing Activities.” Leave three respective columns: one for the description, one for debits and one for credits.
Exhibit the refinanced mortgage. The description should be “Repayment of Mortgage.” Insert the figure from the original mortgage in parentheses in the debit column, denoting a negative number, as in ($50,000).
Show the new mortgage. The description should be “New Mortgage” or “Increase in Mortgages Payable.” Insert the balance of the new mortgage in the credit column. Don't put the number in parentheses, as it's a positive number, as in $75,000. You have now shown that you paid off a $50,000 mortgage with a new $75,000 mortgage.
