difference between cash flow and fund flow statement pdf Wednesday, June 2, 2021 7:52:54 PM

Difference Between Cash Flow And Fund Flow Statement Pdf

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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:. Operating activities.

Difference between Cash Flow and Fund Flow

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While funds flow statement reveals the change in the working capital of a company between two balance sheet dates while cash flow statement reveals the change in the cash position of the company between two balance sheet dates. As funds flow statement shows the change in working capital it deals with all the components of working capital while cash flow statement deals only with cash and cash equivalents. In case of funds flow statement schedule of changes in working capital is prepared while in case of cash flow statement no such schedule is prepared.

While cash flow statement there is classification of cash flows as cash flow from operating activities, cash flow from investment activities and cash flow from financing activities, but as far as funds flow statement is concerned there is no such classification. As cash flow statement is only concerned with cash related transactions it is can be easily understood by a person who does not have accounting knowledge which is not the case with funds flow statement.

Message likes : 1 times. Srinivas Reddy, Excellent and thanks for your immediate response. Best Regards M. Basis of Analysis Funds flow statement is based on broader concept i. Cash flow statement is based on narrow concept i. Source Funds flow statement tells about the various sources from where the funds generated with various uses to which they are put. Cash flow statement stars with the opening balance of cash and reaches to the closing balance of cash by proceeding through sources and uses.

Usage Funds flow statement is more useful in assessing the long-range financial strategy. Cash flow statement is useful in understanding the short-term phenomena affecting the liquidity of the business.

Schedule of Changes in Working Capital In funds flow statement changes in current assets and current liabilities are shown through the schedule of changes in working capital. In cash flow statement changes in current assets and current liabilities are shown in the cash flow statement itself. End Result Funds flow statement shows the causes of changes in net working capital.

Cash flow statement shows the causes the changes in cash. Principal of Accounting Funds flow statement is in alignment with the accrual basis of accounting. In cash flow statement data obtained on accrual basis are converted into cash basis. Advantages of Cash Flow Statement 1. It shows the actual cash position available with the company between the two balance sheet dates which funds flow and profit and loss account are unable to show.

So it is important to make a cash flow report if one wants to know about the liquidity position of the company.

It helps the company in accurately projecting the future liquidity position of the company enabling it arrange for any shortfall in money by arranging finance in advance and if there is excess than it can help the company in earning extra return by deploying excess funds.

It acts like a filter and is used by many analyst and investors to judge whether company has prepared the financial statements properly or not because if there is any discrepancy in the cash position as shown by balance sheet and the cash flow statement , it means that statements are incorrect.

Disadvantages of Cash Flow Statement 1. Since it shows only cash position, it is not possible to deduce actual profit and loss of the company by just looking at this statement.

In isolation this is of no use and it requires other financial statements like balance sheet, profit and loss etc…, and therefore limiting its use. Advantages of Fund Flow Statements A Funds flow statement is prepared to show changes in the assets, liabilities and equity between two balance sheet dates, it is also called statement of sources and uses of funds.

The advantages of such a financial statement are many fold. Some of these are: 1. Funds flow statement reveals the net result of Business operations done by the company during the year. In addition to the balance sheet, it serves as an additional reference for many interested parties like analysts, creditors, suppliers, government to look into financial position of the company.

The Fund Flow Statement shows how the funds were raised from various sources and also how those funds were deployed by a company, therefore it is a great tool for management when it wants to know about where and from what sources funds were raised and also how those funds got utilized into the business. It reveals the causes for the changes in liabilities and assets between the two balance sheet dates therefore providing a detailed analysis of the balance sheet of the company. Funds flow statement helps the management in deciding its future course of plans and also it acts as a control tool for the management.

Funds flow statement should not be looked alone rather it should be used along with balance sheet in order judge the financial position of the company in a better way. Disadvantages of Fund Flow Statements 1. Funds flow statement has many advantages; however it has some disadvantages or limitations also. Funds Flow statement has to be used along with balance sheet and profit and loss account for inference of financial strengths and weakness of a company it cannot be used alone.

Fund Flow Statement does not reveal the cash position of the company, and that is why company has to prepare cash flow statement in addition to funds flow statement.

Funds flow statement only rearranges the data which is there in the books of account and therefore it lacks originality. In simple words it presents the data in the financial statements in systematic way and therefore many companies tend to avoid preparing funds flow statements.

Funds flow statement is basically historic in nature, that is it indicates what happened in the past and it does not communicate anything about the future, only estimates can be made based on the past data and therefore it cannot be used the management for taking decision related to future. I will come back for some more doubts. You need to be the querist or approved CAclub expert to take part in this query. Click here to login now. Similar Resolved Queries. Unanswered Queries. Trending Tags.

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Distinguish Between Cash Flow and Fund Flow Statement

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.

Differences between Cash Flow Statement and Funds Flow Statement

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Cash flow refers to the overall cash generated by the firm in a specific accounting period and is calculated as the sum total of cash from operations, cash flow from financing and cash flow from investing activities, whereas, the fund flow of the company records movement of the cash in and cash out from the company during the specified period of time. Cash flow and fund flow are completely different statements that have varied scopes and serve different purposes. If we compare between cash flow and fund flow, cash flow is more prevalent among investors and more used. But if we look at separately, we will see that both of them serve a meaningful purpose. Cash flow serves a company and its investors and potential investors by showing exactly how much cash is getting injected into the company and how much cash is being paid.

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Поскольку компьютеры должны были выполнять операции в абсолютно точном порядке, самая мелкая ошибка могла иметь колоссальные последствия. Простая синтаксическая ошибка - если бы, например, программист по ошибке ввел вместо точки запятую - могла обрушить всю систему. Происхождение термина вирус всегда казалось Сьюзан весьма забавным. Этот термин возник еще во времена первого в мире компьютера Марк-1 - агрегата размером с комнату, построенного в 1944 году в лаборатории Гарвардского университета.

Осмотрели карманы, одежду, бумажники. Ничего похожего. У Халохота был компьютер Монокль, мы и его проверили.

Лицо мужчины из мертвенно-бледного стало красным. - Вы знаете Капельку Росы? - Вытерев пот со лба рукавом халата, он собирался что-то сказать, но тут отворилась дверь в ванную. Мужчины оглянулись. В дверях стояла Росио Ева Гранада. Это было впечатляющее зрелище.

Difference Between Cash Flow and Fund Flow Statement

Час спустя, когда Беккер уже окончательно опоздал на свой матч, а Сьюзан откровенно проигнорировала трехстраничное послание на интеркоме, оба вдруг расхохотались.


Charlie E. 03.06.2021 at 16:28

Cash flow statements signify the changes in the cash and cash equivalents of the business due to the business operations in one time period. Funds flow statements report changes in a business's working capital from its operations in a single time period, but have largely been superseded by cash flow statements.

Noah S. 04.06.2021 at 01:30

7. Medium term and long term financial planning is done through funds flow statement. 8. Cash flow analysis is based on cash concept. 8.

Abraham C. 05.06.2021 at 05:17

The cash flow statement is prepared so that at the end of a particular period, the net cash flow of the company can be calculated. Fund flow statement is prepared​.

Sabine B. 10.06.2021 at 14:01

Answer The points of distinction between cash flow and funds flow statement are as below: Cash flow statement i It ascertains the changes in balance of cash in hand and bank ii It analyses the reasons for changes in balance of cash in hand and bank iii It shows the inflows and outflows of cash.