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Fund flow statement and cash flow statement

Date: 10 Nov 2012   Posted By: keerthivasan     Group: Education    Category: Exam Questions   

What is meant by fund flow statement? What is the difference between fund flow statement and cash flow statement? What are items is considered in the debit and credit side of adjusted profit and loss A/c to find out the fund from operation? Should we record the assets and liability whose increase or decrease affect the cash balance of the firm in the statement of source and application under fund flow statement?
Explain me conceptual meaning entirely about the fund flow statement.

Want to know about the meanings of fund flow statement and cash flow statement? Learn the differences between fund flow and cash flow statements.

Author: GANESH G BHAT    11 Nov 2012      Member Level: Silver     Points : 5  (Rs 3)    Voting Score: 0

Main differences between Cash flow and Fund flow statement is given below:

1. Fund flow statement reflects the change in the working capital of a company while cash flow statement shows the change in the cash position of the company between two balance sheet dates.

2. Funds flow statement deals with all the components of working capital while cash flow statement deals with cash and cash equivalents.

3. Cash flow statement there is classified into operating activities, investment activities and financing activities, but funds flow statement there is no such classification.

4. As cash flow statement is easily understood by any person but funds flow statement is little bit complex.

Author: keerthivasan    12 Nov 2012      Member Level: Silver     Points : 1    Voting Score: 0

Mr ganesh your answer is satisfactory to understand the basic concepts of fund flow statement and cash flow statement.Thank you.

Author: Anand    16 Nov 2012      Member Level: Gold     Points : 10  (Rs 8)    Voting Score: 2

Dear Friend,

Kindly revert back, in case you find my answer satisfactory or more better. Thanks!!!!!!

1st question:

Fund flow statement is referred as sources and application of funds. It helps in showing detailed revenue received from sources and the amount of money used by the business for many purposes in that Financial Year.

This statement provides addition information which is not generally covered in company's financial statement of accounts (profit and loss account and company's balance sheet).

2nd question:

Fund Flow Statement and Cash Flow Statement are the important instruments to examine, study and understand the financial statement of accounts.

There are many differences between Fund and Cash Flow statement.

The importance ones are outlined below:

1) Fund flow statement is the difference between the total value of Current Assets and Current Liabilities or Net Working Capital. Whereas the cash flow statement is a summary of or receipts or payment [cash] for the period which is in Income Statement.

2) In cash flow statement, there is no format or any statement is required to prepare it. While in fund flow statement, a statement of changes in current asset and current liabilities is required.

3) Fund flow statement is prepared on the basis of Fund or while cash flow statement is based on cash.

4) By preparing cash flow statement, it allows the bank or shareholders of the company about the company prospective and its business. Fund flow statement is prepared actions of the company.

3rd question :

Fund from operation refers to the fund or losses, which is created or sustain loss in the business in the regular operations during each Financial Year.

Both are referred as source and application of funds. Here source is referred to Fund from operation and application is referred as loss from operations.

To arrive the fund from operations, you need to first arrive the net profit and thereafter add any non-operating or non cash expenses (such as Depreciation, goodwill, preliminary expenses) and deduct the non operating income (such as gain on sale of fixed assets, interest received, or refund of taxes if any).



Author: stephen ndungu    27 Dec 2012      Member Level: Gold     Points : 6  (Rs 5)    Voting Score: 0

Fund flow statement and cash flow statement.

Fund flow statement is also referred to as working capital statement
Working capital is equal to current assets minus current liabilities.
Difference between the final working capital and the initial working capital of an enterprise is referred to as the net working capital.
Fund flow statements could not show the ability of an enterprise to pay its current debts because working capital includes such items as stock and pre-paid expenses which do not actually show the cash movement. A business might have a healthy working capital but not able to pay its current debts due to lack of cash and cash equivalence.

Cash flow statements
This differentiates between operating activities which is cash received from sales and other services and also cash payment in operation such like rates rents insurance and other operating expenses
Investing activities which is purchase of fixed assets
Financing activities this is where the fund to finance the companies activities comes from which includes shares debentures long term loans, after paying dividends.
The net of cash from operating activities and cash from investing activities less cash from financing activities gives the net cash available.

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