Difference between cash flow and fund flow statement pdf

Posted on Monday, June 7, 2021 10:21:14 AM Posted by Manon C. - 07.06.2021 and pdf, pdf download 1 Comments

difference between cash flow and fund flow statement pdf

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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.

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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. Funds from operation is calculated. Statement of changes in working capital is not prepared. Statement of changes in working capital is prepared. It is started with cash flows from operating activities. It is started with funds from operation or funds lost in operation.

It is ended with closing cash in hand and cash equivalents. It is ended with either increase in working capital or decrease in working capital. The reasons for the change in cash are known through cash flow statement. The reasons for the change in working capital are known through fund flow statement. Short term financial pIanning is done through cash flow statement. Medium term and long term financial planning is done through funds flow statement. Cash flow analysis is based on cash concept.

Funds flow analysis is based on accrual concept. It is used for preparing cash budgeting. It is used for preparing capital budgeting. It shows only changes in cash position. It is concerned with the changes in working capital between two balance sheet dates.

It is worked as an indicator of improved working capital. It is not necessary that an improved fund position will be an indicator of improved and sound cash position. Increase in current liability or decrease in current assets brings decrease in working capital and vice versa. Increase in current liability or decrease in current asset brings increase in cash and vice versa. Management Accounting. Related Posts.

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Distinguish Between Cash Flow and Fund Flow Statement

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. Comprised of the main revenue -generating activities of a business, such as receipts from the sale of goods and payments to suppliers and employees. Investing activities.

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. Cash Flow and Funds Flow Statements Both funds flow and cash flow statements are used in analysis of past transactions of a business firm. The differences between these two statements are given below: 1. Funds flow statement is based on the accrual accounting system. In case of preparation of cash flow statements all transactions effecting the cash or cash equivalents only is taken into consideration.

Cash Flow statement shows the changes in the cash position Inflows and outflows of a firm. It is an analytical reconciliation statement which explains the reasons for the differences between the opening and closing cash balances over a period. The financial position of any company can be better understood with the help of a cash flow statement and fund flow statement, along with the Balance Sheet and Income statement. So, take a glance of the given article to understand the difference between cash flow and fund flow statement. Basis for Comparison Cash Flow Fund Flow Meaning A cash flow statement is a statement showing the inflows and outflows of cash and cash equivalents over a period. A fund flow statement is a statement showing the changes in the financial position of the entity in different accounting years.


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


Diffence between cashflow & fundflow statements

There are 3 basic financial statements that exist in the area of Financial Management. Balance Sheet. Income Statement. Cash Flow Statement. Fund Flow Statement.

Difference Between Cash Flow and Fund Flow

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.

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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​.


COMMENT 1

  • 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. Alin R. - 10.06.2021 at 21:33

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