Fund Flow and Cash Flow Analysis

Funds Flow Statement is concerned with all items constituting funds (Working Capital)for the business while Cash Flow Statement deals only with cash transactions. In 
other words, a transaction affecting working capital other than cash will affect Funds statement, and not the Cash Flow Statement.
(ii) In Funds Flow Statement, net increase or decrease in working capital is recorded while in Cash Flow Statement, individual item involving cash is taken into account. 
(iii) Funds Flow statement is started with the opening cash balance and closed with the closing cash balance records only cash transactions. 
(iv) Cash Flow Statement is started with the opening cash balance and closed with ht closing cash balance while there a no opening or closing balances in Funds Flow Statement
Cash Flow Statement : Statement showing changes in inflow & outflow of cash during the period.
Methods of cash flow:
1.Direct Method : presenting information in Statement of
A. operating Activities
B. Investment Activities 
C.Financial Activities
2.Indirect Method :uses net income as base & make adjustments to that income(cash & non-cash)transactions.
Funds Flow Statement :Statement showing the source & application of funds during the period.
Major Difference:
The Cash Flow S tatement allows investors to understand how a company's operations are running, where its money is coming from, and how it is being spent. 
Fund Flow Statement is showing the fund for the future activites of the Company

No comments:

Post a Comment