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FUNDS FLOW STATEMENT

Funds flow statement is one of the important tools, which is used


in many
ways. It helps to understand the changes in the financial position
of a business
enterprise between the beginning and ending financial
statement dates. It is
also called as statement of sources and uses of funds.
Funds flow statement is defined as a statement prospective or
retrospective,
setting out the sources and application of the funds of an
enterprise. The
purpose of the statement is to indicate clearly the requirement of
funds and
how they are proposed to be raised and the efficient utilization
and application
of the same.

FUNDS FLOW STATEMENT

FUNDS FLOW STATEMENT

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CASH FLOW STATEMENT

CASH FLOW STATEMENT


Cash flow statement is a statement which shows the sources of cash
inflow and uses of
cash out-flow of the business concern during a particular period of
time. It is the
statement, which involves only short- term financial position of the
business concern.
Cash flow statement provides a summary of operating, investment
and financing cash
flows And reconciles them with changes in its cash and cash
equivalents such as
Marketable securities. Institute of Chartered Accountants of India
issued the
Accounting Standard (AS-3) related to the preparation of cash flow
statement in 1998.
Information about the cash flows of an enterprise is useful in
providing users of
financial statements with a basis to assess the ability of the
enterprise to generate

CASH FLOW STATEMENT

CASH FLOW AND FUNDS FLOW STATEMENT

Followings are the main differences between cash flow statement and
funds flow statement.
1. Concept:- Cash flow statement is based on narrow concept of funds,
which considers changes in cash. Funds flow statement is based on the
changes in working capital which considers both the changes in cash as
well as other components of current assets and current liabilities.
2. Basis Of Preparation:- Cash flow statement is prepared on cash basis.
Funds flow statement is prepared on accrual basis.
3. Working capital:-Cash flow statement does not require use of
changes in working capital because all the changes in assets and
liabilities are summarizes in cash flow statement. Funds flow statement
requires to use of separate statement of changes in net working capital.
4. Link:-The preparation of cash flow statement considers only those
transactions that are linked with flow of cash. The preparation of funds
flow statement considers those transactions that are linked with flow of
funds along with actual cash.
5. Usefulness:-Cash flow statement is more useful in short term
analysis and cash planning. Funds flow statement is more useful in
long-term analysis of financial planning.

CASH FLOW AND FUNDS FLOW STATEMENT

Thecash flow statement, known formally as the


Statement of Cash Flows, reports a company'schange
incash and cash equivalentsfrom onebalance
sheetdate to another. The cash flow statement
classifies the amount of the change according to
operating, investing, and financing activities. The cash
flow statement has been required by the Financial
Accounting Standards Board since 1988, when it issued
its
Statement
No.
95.
Prior
to
1988,accountantsprepared a funds flow statement.
Generally, the funds flow statement reported on the
change inworking capitalfrom one balance sheet date
to another.

CASH FLOW STATEMENT