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A Project Report on fund flow statement

A Project Report on fund flow statement

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Published by nipath

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Published by: nipath on Jan 19, 2010
Copyright:Attribution Non-commercial

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06/25/2013

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A PROJECT REPORTFor the Subject :Advanced AccountingOn the Topic :FUND FLOW STATEMENTC.R.T-1Made by:Nipath BelaniRoll No:6Specialisation:Finance
FUND FLOW STATEMENT
 
A fund flow statement is a summary of a firm'sinflow and outflow of funds. It tells us from wherefunds have come and where funds have gone.Fund flows statement can indicate whethersourcing of funds and their use match in senseand also reveal the prudence or otherwise of afirm's financing and investment decisions Thefinancial statement of the business indicateassets, liabilities and capital on a particular dateand also the profit or loss during a period. But itis possible that there is enough profit in thebusiness and the financial position is also goodand still there may be deficiency of cash or of working capital in business. If the managementwants to find out as to where the cash is beingutilized, financial statement cannot help. Therefore, a statement is prepared of the sourcesand applications of funds from where WorkingCapital comes and where it is utilized. This iscalled Fund Flow statement. Funds FlowStatement is an analytical tool in the hands of financial manager. The basic purpose of thisstatement is to indicate on historical basis thechanges in the working capital i.e., where fundscame from and where they are used during agiven period.
 
 The funds flow statement orstatement of changes in financial position is astatement of flows, it measures the changes thathave taken place during two balance sheet dates.
According to R.N. Anthony
, “Fund Flow is astatement prepared to indicate the increase incash resources and the utilization of such
 
resources of a business during the accountingperiod.”
Fund + Flow = Fund Flow
MEANING OF FUND The term fund has a variety of meaning such ascash fund, capital fund and working capital fund.1. Cash fund –In a narrow sense, fund means onlycash. ‘Cash flow statement’ portrays net effect of the various business transactions on cash intoaccount receipts & disbursement of cash. Thisconcept of preparing fund flow statement is notaccepted, as there are many such transactionswhich do not affect cash but represent the flow of fund .for example: purchase of furniture on creditdoes not affect cash but there is flow of fund.2. Capital fund –Here fund means all financialresources used in the business, whether in theform of men, money, material, machine & others.

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