Scribd Logo
Upload

Welcome to Scribd!

  • 476 views

    Funds Flow Statement

    Uploaded by

    Gurpreet Singh
    The funds flow statement shows the movement of funds in and out of a business over a period of time. It indicates how funds were obtained and how they were used. Specifically, it is a statement of sources and applications of funds that analyzes changes in the financial position of a business between two dates. The statement is prepared in a two-part format, consisting of a schedule of changes in working capital and a statement of sources and uses of funds.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd

    Funds Flow Statement

    Uploaded by

    Gurpreet Singh
    476 views14 pages
    The funds flow statement shows the movement of funds in and out of a business over a period of time. It indicates how funds were obtained and how they were used. Specifically, it is a statement of sources and applications of funds that analyzes changes in the financial position of a business between two dates. The statement is prepared in a two-part format, consisting of a schedule of changes in working capital and a statement of sources and uses of funds.

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The funds flow statement shows the movement of funds in and out of a business over a period of time. It indicates how funds were obtained and how they were used. Specifically, it is a statement of sources and applications of funds that analyzes changes in the financial position of a business between two dates. The statement is prepared in a two-part format, consisting of a schedule of changes in working capital and a statement of sources and uses of funds.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    476 views14 pages

    Funds Flow Statement

    Uploaded by

    Gurpreet Singh
    The funds flow statement shows the movement of funds in and out of a business over a period of time. It indicates how funds were obtained and how they were used. Specifically, it is a statement of sources and applications of funds that analyzes changes in the financial position of a business between two dates. The statement is prepared in a two-part format, consisting of a schedule of changes in working capital and a statement of sources and uses of funds.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    m Funds flow statement is a statement which shows

    the movement of funds and is a report of the


    financial operations of the business undertaking.
    m It indicates various means by which funds were
    obtained during a particular period and the ways in
    which these funds were employed.
    m In simple words, it is a statement of sources and
    applications of funds.
    m 2 statement of sources and application of funds is
    a technical device designed to analyse the
    changes in the financial condition of a business
    enterprise between two dates.´
    m In a narrow sense, funds means cash only and a
    funds flow statement prepared on this basis is
    called a cash flow statement.
    m In a broader sense, the term µfunds¶ means all
    financial resources, used in business whether in
    the form of men, material, money, machinery and
    others.
    m In a popular sense, the term µfunds¶ means
    working capital, i.e. the excess of current assets
    over current liabilities.
    6 6
      
    

    ! It highlights the changes in the It depicts the items of expenses


    financial position of a business & and income arrive at the figure of profit
    indicates the various means and uses of or loss.
    funds.

    ! It is complementary to income This is not prepared from funds flow


    statement. Income statement helps in statements.
    the preparation of funds flow statement.

    ! There is no prescribed format for It is prepared in a prescribed format.


    preparing funds flow statement.
    6 6
     
    
     
    ! It is a statement of changes in It is a statement of financial position
    in financial position and hence is on a particular date and hence is static
    dynamic in nature. in nature.

    ! It shows the sources & uses of funds It depicts the assets and liabilities
    in a particular period of time. at a particular point of time

    ! It is a tool of management for It is not of much help to management in


    financial analysis and helps in making making decisions.
    decisions.

    ! chedule of changes in working No such schedule is required.


    capital has to be prepared before
    preparing before preparing
    funds flow statement.
    The preparation of funds flow statement consists of
    two parts:
    1. tatement or schedule of changes in working
    capital.
    2. tatement of sources and application of funds.
    m °orking Capital = Current ssets ± Current
    Liabilities
    m Important points are:
    1. n increase in current assets, increases working
    capital.
    2. decrease in current assets, decreases working
    capital.
    3. n increase in current liabilities, decreases
    working capital.
    4. decrease in current liabilities, increases
    working capital.
    =
      
     =        
    
    
    
     
    
    Increase Decrease
    ï  
    Cash in hand and at bank
    Bills receivable
    Debtors
    Temporary investments
    tocks/Inventories
    Prepaid expenses
    ccrued incomes

    j  
    
    ï  


    
    

    ill l
    r it r
    O t t i

     r r ft
    S rt-t r  
    ii l
    r  ii
    r ii  f r t  ti 

    j      

    °ri it l ( ± L)
    Nt Ir  r r  i °ri
    it l
    Prepare a statement of changes in working capital from the
    following balance sheets of BC Ltd.
    ¢
            

    Equity capital 500000 500000 Fixed assets 600000 700000

    Debentures 370000 450000 Long-term 200000 100000


    investments
    Tax payable 77000 43000 °ork-in- 80000 90000
    progress
    ccounts 96000 192000 tock-in-trade 150000 225000
    payable
    Interest payable 37000 45000 Bills receivable 70000 140000

    Dividend 50000 35000 Cash 30000 10000


    payable
    j     
    This statement is prepared in two formats:
    1. Report form
    2. T form or an account form or self balancing type
    —       
    Funds from operation
    Issue of share capital
    Raising of long-term loans
    ale of fixed assets
    Non-trading receipts such as dividends received
    ale of investments (long-term)
    Decrease in °orking Capital (as per schedule of changes in working capital)
    j 

            


    Funds lost in operations
    Redemption of preference share capital
    Redemption of debentures
    Repayment of long-term loans
    Purchase of fixed assets
    Purchase of long-term investments
    Non-trading payments
    Payments of dividends
    Payment of tax
    Increase in working capital (as per schedule of changes in working capital)
    j 
    j6 
       6  
    
    j 
    6 6
    
    è  
       !" 
     !"
    Funds from operations Funds lost in operations
    Issue of share capital Redemption of preference share
    Issue of debentures capital
    Raising of long-term loans Redemption of debentures
    ale of fixed assets Repayment of long-term loans
    Non-trading receipts such as Purchase of fixed assets
    dividends Purchase of long-term
    ale of long-term investments investments
    Net decrease in working capital Non-trading payments
    Payment of dividends
    Payment of tax
    Net increase in working capital

    j
    

    #$ % =
       
    
    & 
    
    
    
    
    
       
          
    
    
       
         
      "
    
     
    6  ' 
    
    (  = 
    ¢  
    Particulars Rs. Particulars Rs.
    j Depreciation & Depletion or  £pening Balance (of P & L /c)
    amortization of fictitious and intangible  Transfers from excess
    assets, such as: Goodwill, Patents, provisions
    Trade Marks, Preliminary Expenses etc.
     ppreciation in the value of
    j ppropriation of Retained Earnings
    such as: Transfers to General Reserve, fixed assets
    Dividend Equalization Fund, inking  Dividends received
    Fund, etc.  Profit on sale of fixed assets
    j Loss on sales of any fixed asset     
    
    j Dividends (including interim dividend) (balancing figure in case debit side
    j Proposed Dividend (if not taken as a exceeds credit side)
    current liability)
    j Provision for taxation (if not taken as
    a current liability)
    j Closing balance (of P & L /c)
    j  
      
     (balancing
    figure, in case credit side exceeds the
    debit side)

    You might also like