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    Fund Flow Statement

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    priyasunil2008
    The fund flow statement shows the changes in financial position between two balance sheet dates by indicating the sources and uses of funds. It involves preparing three statements: 1) a statement of changes in working capital, 2) a profit and loss appropriation account, and 3) a sources and uses of funds statement. The statement of changes in working capital illustrates changes in net working capital from sources or uses of funds. The fund flow statement reconciles the sources and uses of funds during the accounting period.

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    Fund Flow Statement

    Uploaded by

    priyasunil2008
    121 views10 pages
    The fund flow statement shows the changes in financial position between two balance sheet dates by indicating the sources and uses of funds. It involves preparing three statements: 1) a statement of changes in working capital, 2) a profit and loss appropriation account, and 3) a sources and uses of funds statement. The statement of changes in working capital illustrates changes in net working capital from sources or uses of funds. The fund flow statement reconciles the sources and uses of funds during the accounting period.

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    The fund flow statement shows the changes in financial position between two balance sheet dates by indicating the sources and uses of funds. It involves preparing three statements: 1) a statement of changes in working capital, 2) a profit and loss appropriation account, and 3) a sources and uses of funds statement. The statement of changes in working capital illustrates changes in net working capital from sources or uses of funds. The fund flow statement reconciles the sources and uses of funds during the accounting period.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    121 views10 pages

    Fund Flow Statement

    Uploaded by

    priyasunil2008
    The fund flow statement shows the changes in financial position between two balance sheet dates by indicating the sources and uses of funds. It involves preparing three statements: 1) a statement of changes in working capital, 2) a profit and loss appropriation account, and 3) a sources and uses of funds statement. The statement of changes in working capital illustrates changes in net working capital from sources or uses of funds. The fund flow statement reconciles the sources and uses of funds during the accounting period.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Fund flow statement

    • FFS is a statement in summary form that indicates


    the changes in the items of financial position
    between two balance sheet dates showing clearly
    the sources and application of funds.
    • The fund flow statement involves the preparation
    of three statements
    – Statement or schedule of changes in working capital
    – P&L Appropriation account
    – Sources and uses of fund statements
    • Schedule of Changes in Working Capital
    • The ultimate purpose of preparing the
    schedule of changes in the working capital is
    to illustrates the changes in the volume of net
    working capital which envisages either sources
    or application of fund.
    Rules for preparing the statement of changes
    in working capital
    Statement of changes in working capital
    Fund flow statement
    Particulars Rs Particulars Rs

    Sources of funds : Application of funds:


    Issue of shares Redemption of preference
    Issue of debentures shares
    Long term borrowings Redemption of shares
    sale of fixed assets Redemption of debentures
    Operating profit/fund from Payment of long term loans
    operation * Purchase of fixed assets
    Decrease in working capital* Operating loss/fund lost on
    operations*
    Increase in working capital*
    -------- --------------
    xxxxxx -
    * Only one figure will be there Xxxxxxxxx
    Adjustment of some typical items
    • Treatment of tax and dividend:-
    • It is preferable to treat them as non current
    items if nothing is specified
    • If tax payable or ‘dividend payable’ is given on
    the balance sheet liabilities side, it is to be
    taken as current liabilities. Provision for tax and
    proposed dividend are non current. Once tax is
    assessed or dividend is declared, it becomes a
    liability to be paid off immediately.
    Tax and dividend in different ways
    • If provision for tax and dividend are given in
    the adjustments alone and nothing is given in
    the balance sheets, the given amount is
    debited to the adjusted P&L a/c. it is also
    shown as application of funds flow statement.
    It is presumed that provision is made and
    payment also is made immediately
    • If provision for tax and proposed dividend are
    given in the balance sheet alone and nothing
    is mentioned in the adjustments, the opening
    balance of these items can be assumed to
    have been paid in cash during the current
    year. The opening balance are shown as
    application of funds. The closing balances are
    debited to the adjusted profit and loss a/c as
    provision made during the year
    • If provision for tax and proposed dividend are
    given in the balance sheet as well as in
    adjustments, it is necessary to prepare
    separate ledger accounts for them. From those
    accounts, the tax and dividend paid are shown
    as application as application of funds. The
    provisions made are shown in the debit side of
    adjusted P/L a/c.

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