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    Amity Business School: MBA Class of 2010, Semester I Accounting For Managers Fund Flow Statement by Santosh Kumar

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    kumaranil_1983
    The document discusses the concept and preparation of a fund flow statement from Amity Business School. It defines fund flow and cash flow statements, explains the framework for preparing a fund flow statement including sources of information and procedural steps, and provides examples of adjustments made for non-fund items like depreciation, taxation, and reserves.

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    Amity Business School: MBA Class of 2010, Semester I Accounting For Managers Fund Flow Statement by Santosh Kumar

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    kumaranil_1983
    39 views16 pages
    The document discusses the concept and preparation of a fund flow statement from Amity Business School. It defines fund flow and cash flow statements, explains the framework for preparing a fund flow statement including sources of information and procedural steps, and provides examples of adjustments made for non-fund items like depreciation, taxation, and reserves.

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    57c50ffs(module3)

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    The document discusses the concept and preparation of a fund flow statement from Amity Business School. It defines fund flow and cash flow statements, explains the framework for preparing a fund flow statement including sources of information and procedural steps, and provides examples of adjustments made for non-fund items like depreciation, taxation, and reserves.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    39 views16 pages

    Amity Business School: MBA Class of 2010, Semester I Accounting For Managers Fund Flow Statement by Santosh Kumar

    Uploaded by

    kumaranil_1983
    The document discusses the concept and preparation of a fund flow statement from Amity Business School. It defines fund flow and cash flow statements, explains the framework for preparing a fund flow statement including sources of information and procedural steps, and provides examples of adjustments made for non-fund items like depreciation, taxation, and reserves.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 16

    Amity Business School

    Amity Business School


    MBA Class of 2010, Semester I
    Accounting For Managers
    Fund Flow Statement
    By Santosh Kumar

    1
    Amity Business School

    Fund Flow Concept


    • Fund ----Broader----Working Capital----
    Fund Flow Statement
    • Fund----Narrower----Cash Balance----
    Cash Flow Statement
    Amity Business School

    Flow
    Inflow---Increase-----Sources of Fund----If
    a transaction increases the WC---credit

    Outflow---Uses/Application---------------If
    a transaction decreases the working
    capital----debit
    Amity Business School

    Accounts

    • Current account and change ( schedule of changes in


    working capital)
    • Non current account and change (fund flow statement)
    • Transactions and relevance of wc
    • Thumb rule of fund flow (change in current account and
    same change in non current account is necessary)
    • What all limitations (historical information)
    Amity Business School

    Sources of Information
    • BS---------------------2
    • Income Statement
    • Statement of Retained Earnings
    • Supplementary information
    Amity Business School

    Procedural Framework
    • Schedule of Changes in wc
    • Funds from operations
    • Preparation of ledger account
    • Statement of sources and application (fund flow
    statement)
    Amity Business School

    cont.
    • Non fund items
    • Non operating items
    • Fund from operations= net profit + Items which don’t
    result in outflow-Items which don’t result in inflow
    • Adjustments….Depreciation, Provision of tax
    /dividend, capital expenditure written off
    • Numerical
    Amity Business School

    • Fund Flow Statement


    Sources Applications
    Long term loans Payment of loans
    Sale of assets/investment Purchase of
    asset/investment
    Funds from operation Operational loss
    Issue of share capital and Redemption of share
    debenture capital/debenture
    Income from dividends Payment of tax/dividend
    Amity Business School

    • Funds from operation =


    Net profit
    + Depreciation/capital expenditure written off
    + provision of tax/dividend
    + loss on sale of fixed asset/investment
    -gain on sale of asset/investment
    -dividend received on investment
    Amity Business School

    Adjustments
    1. Provision for taxation (if current account)
    • As a current account item……..it is
    considered as current liability and
    adjusted in Schedule of changes of
    Working Capital
    • Item of tax given outside the trial balance
    should be omitted because actual
    payment of tax will affect two current
    accounts eg cash and provision for tax
    Amity Business School

    cont
    2. Provision of taxation ( as non current
    item)
    • Considered as appropriation of profits and
    thus a non current liability
    • Ist adjustment in funds from operation by
    adding the amount paid this year
    • 2nd adjustment is the actual application of
    tax in the fund flow statement as an
    application
    Amity Business School

    cont
    3.Proposed dividend

    Same treatment as provision for tax


    Amity Business School

    cont
    4. Interim dividend ….paid between two
    balance sheet dates
    • It is non operating item
    • Adjusted in the calculation of funds from
    operation
    Amity Business School

    cont
    5.Depreciation
    • Non fund item
    • Simply a book entry without cash flow
    • Adjusted in the funds from operation by
    adding in the net profit because it is a
    charge against profits
    • Same treatment for goodwill written off
    Amity Business School

    cont
    6. Creation of reserve
    • Appropriation of profits 9created out of
    profits)
    • No flow of fund
    • Adjustment in funds from operation
    Amity Business School

    cont.
    7. Gain or loss from the sale of fixed asset
    • Non fund item
    • Gain or loss often transferred to P&L
    account
    • Adjusted in the funds from operation
    (addition in case of loss and subtraction in
    case of profit)

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