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    Funds Flow Statement and Cash Flow Statement

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    Lysss Epssss
    The document compares funds flow statements and cash flow statements. Funds flow statements are based on accrual accounting and analyze long-term sources and uses of funds, which impact working capital. They consider both long and short-term funds. Cash flow statements focus only on transactions that impact cash and cash equivalents, and consider changes in current assets and liabilities to calculate cash from operations. Cash flow statements are more useful for identifying current liquidity problems, while funds flow statements are better for long-range planning.

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    Funds Flow Statement and Cash Flow Statement

    Uploaded by

    Lysss Epssss
    77 views2 pages
    The document compares funds flow statements and cash flow statements. Funds flow statements are based on accrual accounting and analyze long-term sources and uses of funds, which impact working capital. They consider both long and short-term funds. Cash flow statements focus only on transactions that impact cash and cash equivalents, and consider changes in current assets and liabilities to calculate cash from operations. Cash flow statements are more useful for identifying current liquidity problems, while funds flow statements are better for long-range planning.

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    The document compares funds flow statements and cash flow statements. Funds flow statements are based on accrual accounting and analyze long-term sources and uses of funds, which impact working capital. They consider both long and short-term funds. Cash flow statements focus only on transactions that impact cash and cash equivalents, and consider changes in current assets and liabilities to calculate cash from operations. Cash flow statements are more useful for identifying current liquidity problems, while funds flow statements are better for long-range planning.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    77 views2 pages

    Funds Flow Statement and Cash Flow Statement

    Uploaded by

    Lysss Epssss
    The document compares funds flow statements and cash flow statements. Funds flow statements are based on accrual accounting and analyze long-term sources and uses of funds, which impact working capital. They consider both long and short-term funds. Cash flow statements focus only on transactions that impact cash and cash equivalents, and consider changes in current assets and liabilities to calculate cash from operations. Cash flow statements are more useful for identifying current liquidity problems, while funds flow statements are better for long-range planning.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Funds Flow Statement and Cash

    Flow Statement | Financial


    Management
    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:
    Difference # Funds Flow Statement:
    1. Funds flow statement is based on accrual accounting system.

    2. Funds flow statement analyses the sources and application of funds


    of long-term nature and net increase or decrease in long-term funds
    will be reflected on the working capital of the firm.

    3. Funds flow statement is more useful in long range planning.

    4. Funds flow statement is a broader concept, it takes into account


    both long-term funds and short-term funds into account in analysis.

    5. Funds flow statement tallies the funds generated from various


    sources with various uses to which they are put.

    6. The changes in current items are adjusted in the statement of


    changes in working capital.

    7. Funds flow statement shows the funds generated and applied as


    regards long-term assets long-term liabilities and capital.

    8. Sound fund position does not necessarily mean sound cash position.

    Difference # Cash-Flow Statement:


    1. While preparation of this statement, all transactions effecting the
    cash and cash equivalents are taken into consideration.
    2. Cash-flow statement considers only the increase or decrease in
    current assets and current liabilities in calculating the cash flow from
    operations.

    3. Cash-flow statement is more useful for identifying and correcting


    the current liquidity problems of the firm.

    4. Cash-flow statement only deals with one of the current assets on


    assets side of balance sheet.

    5. Cash-flow statement starts with the opening balance of cash and


    reach to the closing balance of cash by proceeding through sources and
    uses.

    6. In this statement cash from operations are calculated after adjusting


    the increase or decrease in current assets and current liabilities to
    operating profit before working capital changes.

    7. Cash-flow statement shows the cashflow from operating, financing


    and investment activities.

    8. Sound cash position is always followed by sound fund position.

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