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What is the difference between cash flow and funds flow statement?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pinky asked almost 3 years ago

What is the difference between cash flow and funds flow statement?

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5 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pankaj answered over 2 years ago

1.Cash flow is a statement which disclose the changes in cash position between the two periods. 2.eg-balance sheet of 31.3.14 shows cash Rs.30000.and as on 31.3.15 Rs. 40000.Means there is inflow of 10000 during the year. 3.The cash flow is prepared in accordance with AS 3. 4.The difference of cash flow can be devided in three activities namely operating activities,investing activities,financing activities. Fund Flow statement 1.Ascertaining the changes in financial position of a firm between two accounting period is known as funds flow statement. 2.It basically analyses the reason for changes in financial position between two balance sheets. 3.It shows inflow and outflow of funds i.e sources and applications of funds. 4.Fund means working capital.here you need to calculate difference between current assets and current liabilities. 5.Sources of fund -Eg-issues shares and debentures for cash,long term loans,sale of investment /fixed assets. 6.Application of funds-eg-purchase of fixed asset,redemption of debentures,preference of shares,repayment of loan.

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Open uri20170510 32134 1nqu8aj?1494421649 sowmya answered almost 3 years ago

hii the main differences are i) A cash flow statement shows only the changes in cash position, whereas a funds flow statement shows changes in working capital position between two balance sheet dates. Cash is only one of the elements of working capital. Therefore, a funds flow statement has a wider coverage than a cash flow statement. (ii) A cash flow statement is merely a record of cash receipts and payments. It is no doubt useful but it does not show many important changes involving the disposition of resources. In studying the short-term solvency of a firm one is interested not only in cash balance but also in the assets which are easily convertible into cash. Funds flow statement provides information about such assets. (iii) Cash flow statement is more useful to the management as a tool of financial analysis in short term. Funds flow statement is more useful in long-term. iv)Cash is a part of working capital. Therefore, an improvement in cash position results in an improvement in the funds position. An inflow of funds may not result inflow of cash. In other words, a sound cash position generally means a sound funds position but a sounds funds position does not necessarily mean a sound cash position. (v) The technique of preparing a funds flow statement is different from the technique of preparing a cash flow statement. An increase in the current liability or a decrease in a current asset results in an outflow of funds. But an increase in current liability or decrease in current assets (other than cash) does not result in cash inflow.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 pranjali answered almost 3 years ago

CASH Flow 1.Cash flow is a statement which disclose the changes in cash position between the two periods. 2.eg-balance sheet of 31.3.14 shows cash Rs.30000.and as on 31.3.15 Rs. 40000.Means there is inflow of 10000 during the year. 3.The cash flow is prepared in accordance with AS 3. 4.The difference of cash flow can be devided in three activities namely operating activities,investing activities,financing activities. Fund Flow statement 1.Ascertaining the changes in financial position of a firm between two accounting period is known as funds flow statement. 2.It basically analyses the reason for changes in financial position between two balance sheets. 3.It shows inflow and outflow of funds i.e sources and applications of funds. 4.Fund means working capital.here you need to calculate difference between current assets and current liabilities. 5.Sources of fund -Eg-issues shares and debentures for cash,long term loans,sale of investment /fixed assets. 6.Application of funds-eg-purchase of fixed asset,redemption of debentures,preference of shares,repayment of loan. This topic is very important in practical life for large financing report which are prepared by CA's

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Picsjoin 2017224123730582 Archana answered almost 3 years ago

Hie Pinky, Difference between cash flow and fund flow statement is as follows :- CASH FLOW --------- Companies receive inflows of cash revenue from selling goods, providing services, selling assets, earning interest on investments, rent, taking out loans or issuing new shares. Cash outflows can result from making purchases, paying back loans, expanding operations, paying salaries or distributing dividends. Since the Securities and Exchange Commission (SEC) requires all listed companies to use accrual accounting – which largely ignores the actual balance of cash on hand – investors and lenders rely on the statement of cash flow to evaluate a company's liquidity and cash flow management. It is a more reliable tool than metrics companies use to dress up their earnings, such as earnings before interest, taxes, depreciation and amortization. FUND FLOW --------- The statement of fund flow was primarily used by accountants to report any change in a company's net working capital during a set period of time. Much of this information is captured in the statement of cash flow. The investing use of fund flow is more useful today. Here, overall investor sentiment can be gauged as it relates to different asset classes. If the flow of funds for equities is positive, for example, it suggests that investors have a generally optimistic view of the economy (or at least the short-term profitability of listed companies).

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered almost 3 years ago

**DIFFERENCE BETWEEN CASHFLOW AND FUNDFLOW STATEMENT`** Cashflow statement shows the incoming and outgoing cash of the firm and also of cash equivalents of certain period whereas fundflow statement is statement which shows changes in the financial position of the organisation Cashflow statement is prepared to show how and why there are changes in the cash flow from beginning to the end fundflow is prepared to show why there are changes in financial position which is compared to past year;s performance Cashflow is a short term analysis whereas fundflow is long term. Cashflow is part of financial statements of company but fundflow is not part of financial statements of company Thanks

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