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Difference Between Cash Flow and Fund Flow Statements: By: Ravi Kumar II

Cash flow statements show the movement of cash and cash equivalents over an accounting period, divided into operating, investing, and financing activities. Funds flow statements depict the effect of transactions on assets and liabilities over a period based on accrual accounting. Key differences are that cash flow statements use cash basis accounting and focus only on cash variations, while funds flow statements use accrual basis and examine working capital changes. Cash flow statements begin with an opening cash balance while funds flow statements do not track opening/closing cash balances.

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81 views11 pages

Difference Between Cash Flow and Fund Flow Statements: By: Ravi Kumar II

Cash flow statements show the movement of cash and cash equivalents over an accounting period, divided into operating, investing, and financing activities. Funds flow statements depict the effect of transactions on assets and liabilities over a period based on accrual accounting. Key differences are that cash flow statements use cash basis accounting and focus only on cash variations, while funds flow statements use accrual basis and examine working capital changes. Cash flow statements begin with an opening cash balance while funds flow statements do not track opening/closing cash balances.

Uploaded by

Deepakgupta0001
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Difference Between Cash flow

and Fund flow statements


By: Ravi kumar II
What is cash flow?
• It is a statement that reveals movement of
cash and cash equivalents during a given
period usually an accounting year.
Activities under cash flow
• Basically , cash flow statement is mixture
of three activities .
 Cash flow from Operating activities.
 Cash flow from Investing activities.
 Cash flow from Financing activities.
FORMAT OF CASH FLOW
Particular
STATEMENT Rs Rs

A) Cash Flow from Operating Activities -------


------
-------
------
Net profit ------
------
Add: Non-operating expenses: ------
------
Depreciation ------

General reserve(+) ----- ------


w/o Goodwill(-) -----
-----
w/o preliminary expenses(-) -----
-----
Discount on issue of Share/Debenture(-) ------
------
Loss on sale of fixed Assets

Less: Non-operating income


Dividend Received
Refund of Tax
Gain on sale of fixed assets
(cash from operation)
Add: Increase in current liabilities:
Decrease in current Assets:
Less: Increase in current Liabilities
Decrease in current Assets

Net Cash from Flow operating activities.

------
Particulars Rs Rs
B) Cash flow from investing activities

Purchased of fixed assets(-)


------
-------
Sales of fixed assets(-)

Net cash flow from investing activity ------


C) Cash flow from financing activities
Issue of Share capital -------
Issue of Debenture --------
Redemption of Debenture(-)
--------
Repayment of loan(-)
--------
Net cash flow form financing activities. -------
Fund Flow Statement
• It is merely a statement of the assets and
liabilities .
• It depicts the effect of various transactions
in a period.
Particulars As on As on Increase Decrease

Current Assets:
Cash balance
Bank balance
Marketable securities
Accounts receivable
Stock in trade

Current liabilities:
Bank overdraft
Outstanding expenses
Accounts payable
Distinction B/w cash flow statement and
funds flow statement
Basis of Difference Cash flow statement Funds flow statement
1. Concept Cash flow statement is based on a Funds flow statement is based on a
narrow concept i.e. cash broader concept i.e. working capital.
It is based upon accrual basis of
2. Basis of accountingIt recognizes cash basis of accounting.
3. Significance accounting It is useful for long-term financial
It is useful for short-term financial planning.
planning.
4. Causes of variation It studies causes of change in
5. Starting point It studies only the causes of cash working capital.
variations. There is no opening balance in
It begins with an opening balance funds flow statement. In funds flow
of cash and the balancing figure is statement opening and closing
equal to closing balance of cash balance of cash is shown in
book. schedule of changes in working
6. Cash/funds form capital.
While preparing funds flow
operation statement funds from operation is
While making cash flow statement calculated .
cash from operation is calculated.
7.Schedule of change in Such a schedule is not While preparing funds flow
prepared for statement. schedule of
working capital preparing cash flow changes in working capital is
statement prepared separately.
CONCLUSION
Fund flow statement are prepared to explain the
financial consequences of business operations.
It also analyze and solve queries. It acts as an
instrument for allocation of resources.

Cash flow statement are prepared to determine


the change in cash position from one period to
another.

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