Cash Flow And Fund Flow Statement Pdf

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Published: 20.04.2021

Use of cash flow reporting has been in the rise for the past few years to ensure that cash flows are reported in a form that highlights the significant components of cash flow and facilitates comparison of the cash flow performance of different business.

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Fund Flow Analysis

Even though Cash flow statement and Funds flow statement focus on the concept of fund, there are some differences between these two statements. They are discussed below. It is prepared on the basis of cash and cash equivalents. It is prepared on the basis of fund as working capital. Cash from operation is calculated. Funds from operation is calculated.

Login details for this Free course will be emailed to you, This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. First, we need to add back losses if any while selling any long term assets or. The cash flow statement is one of the three financial statements a business owner uses in cash flow analysis. Also, cash flow analysis is not an easy thing to calculate. For example, earnings are said to be higher if cash from operating activities is higher than net income.

Preparing Funds Flow Statement: Steps, Rules and Format

Cash Flow statement shows the changes in the cash position Inflows and outflows of a firm. It is an analytical reconciliation statement which explains the reasons for the differences between the opening and closing cash balances over a period. The financial position of any company can be better understood with the help of a cash flow statement and fund flow statement, along with the Balance Sheet and Income statement. So, take a glance of the given article to understand the difference between cash flow and fund flow statement. Basis for Comparison Cash Flow Fund Flow Meaning A cash flow statement is a statement showing the inflows and outflows of cash and cash equivalents over a period. A fund flow statement is a statement showing the changes in the financial position of the entity in different accounting years. Purpose of Preparation To show the reasons for movements in the cash at the beginning and at the end of the accounting period.

The notion of funds is described by several accountants in different way. The term funds have different meaning according to interpretation of accountants and accounting approaches. Flow of fund means inward and outward movement of funds of an enterprise. Basically, funds denote to working capital and flow means movement and changes. In this regard, flow of funds encompasses movement in working capital items such as current assets and current liabilities. Fund flow analysis is the analysis of flow of fund from current asset to fixed asset or current asset to long term liabilities or vice-versa.


A cash flow statement, when used in conjunction with other financial statements, provides information that enables its users to evaluate the changes in net assets​.


Fund Flow Statement Changes in Financial Position : (a) Fund Flow Statement (b) Cash Flow Statement

Cash flow refers to the current format for reporting the inflows and outflows of cash , while funds flow refers to an outmoded format for reporting a subset of the same information. Cash flow is derived from the statement of cash flows. This statement is required under Generally Accepted Accounting Principles GAAP , and shows the inflows and outflows of cash generated by a business during a reporting period. The information in a statement of cash flows is aggregated into the following three areas:.

Read this article to learn about the steps, rules and format required for preparing funds flow statement with schedule of changes in working capital. For each non-current account on the balance sheet, establish the increase or decrease in that account. Analyze the change to decide whether it is a source increase or use decrease of working capital. Be sure the total of all sources including those from operations minus the total of all uses equals the change found in working capital in Step 1.

Let us make an in-depth study of the meaning, objectives, importance, limitations, general rules and preparation of fund flow statement. A fund flow statement is a statement in summary form that indicates changes in terms of financial position between two different balance sheet dates showing clearly the different sources from which funds are obtained and uses to which funds are put. It summarizes the financing and investing activities of the enterprise during an accounting period. By depicting all inflows and outflows of fund, the statement shows their net impact on working capital of the firm. If the total of inflows is greater than the outflows, the excess goes to increase in working capital.

Differences between Cash Flow Statement and Funds Flow Statement

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