The document provides information about a fund flow statement and cash flow statement. It compares the two statements based on their basis of analysis, sources, usage, schedule of changes in working capital, end result, and principal of accounting. A fund flow statement is based on broader working capital concept, shows sources and uses of funds, is useful for long-term financial strategy, shows changes in working capital through a schedule, and is aligned with accrual basis of accounting. A cash flow statement is based on cash flows, shows sources and uses affecting liquidity, and converts accrual basis data to cash basis.

1. CAREER
POINT
UNIVERSIT
Y
School
of
Commerce
&
management

2. FUND
FLOW
STATEMENT

3. Acknowledgement :
I would like to express my special thanks of
gratitude to my teacher (Pragya Bhargav Ma’am
(my mentor); Assistant professor) who gave me
the golden opportunity to do this wonderful
project on the topic (Fund-Flow
Statement),which also helped me in doing a lot
of Research and I came to know about so many
new things I am really thankful to them.
Secondly I would also like to thank my parents
who helped me a lot in finalizing this project
within the limited time frame.

5. Content :

9. S.no Basis Funds Flow Statement Cash Flow Statement
1.
Basis of
Analysis
It is based on broader concept i.e.
working capital.
It is based on narrow concept i.e. cash, which
is only one of the elements of working capital.
2. Source
It tells about the various sources from
where the funds generated with various
uses to which they are put.
It start with the opening balance of cash and
reaches to the closing balance of cash by
proceeding through sources and uses.
3. Usage
It is more useful in assessing the long-
range financial strategy.
It is useful in understanding the short-term
phenomena affecting the liquidity of the
business.
4.
Schedule of
Changes in
Working
Capital
In funds flow statement changes in
current assets and current liabilities are
shown through the schedule of changes
in working capital.
In cash flow statement changes in current
assets and current liabilities are shown in the
cash flow statement itself.
5. End Result
It shows the causes of changes in net
working capital.
It shows the causes the changes in cash.
6.
Principal of
Accounting
Funds flow statement is in alignment
with the accrual basis of accounting.
In cash flow statement data obtained on
accrual basis are converted into cash basis.

11. Particulars Previous year Current year
Increase in
Working
Capital
Decrease in
Working
Capital
I. Current Assets :
Cash
Bank
Marketable securities
Prepaid expenses
Stock
Debtor
Bills Receivables
Total (A)

12. Particulars Previous year Current year
Increase in
Working
Capital
Decrease in
Working
Capital
II. Current Liabilities :
Bank Overdraft
Creditor
Outstanding expenses
etc.
Total (B)
(A – B)
Net increase/decrease
in working capital
Continue…..

14. Particulars
Amount
₹
Net profit As per P&L a/c
Add : Non-operating/non-cash expenses which was debited in P&L a/c –
a). Loss on sale of fixed assets
b). Proposed dividend
c). Preliminary expenses written off
d). Goodwill written off
e). Depreciation etc..
Less : Non-operating/non-cash expenses which was credited in P&L a/c –
a). Profit on sale of fixed assets
b). Interest/Dividend
c). Premium received etc.
Fund From Operation

15. Source of funds
Amount
₹
Application of funds
Amount
₹
Decrease in working capital Increase in working capital
Funds from operation (+ve) Funds from operation(-ve)
Issue of shares/Debentures Redemption of preference
share capital
Bank loan taken Buy back of shares
Sale of fixed assets/non-
current investments
Repayment of loan
Dividend received Purchase of fixed assets/non-
current investments
Interest received Tax paid
Dividend/interest paid

17. Q 1. From the following Balance sheet of William & Co. Ltd.,
you are required to prepare a Statement of Changes in
Working Capital and Fund flow Statement.
Liabilities
2016
₹
2017
₹
Assets
2016
₹
2017
₹
Capital 80,000 85,000 Cash in hand 4,000 9,000
Profit & loss 14,500 24,500 Sundry debtors 16,500 19,500
Sundry creditors 9,000 5,000 Stock 9,000 7,000
Long-term Loans Nil 5,000 Machinery 24,000 34,000
Building 50,000 50,000
1,03,500 1,19,500 1,03,500 1,19,500
Balance Sheet

18. Sol…..
Particulars
Previous year
₹
Current year
₹
Increase in
current
assets
Decrease in
current
assets
I. Current assets :
Cash in hand 4,000 9,000 5,000
Sundry debtors 16,500 19,500 3,000
Stock 9,000 7,000 2,000
Total (A) 29,500 35,500
II. Current liabilities :
Sundry Creditors 9,000 5,000 4,000
Total (B) 9,000 5,000
A - B 20,500 30,500
Net increase in working
capital
10,000 10,000
Total 30,500 30,500 12,000 12,000

19. Continue…..
Source of funds
Amount
₹
Application of funds
Amount
₹
Capital 5,000 Increase in working capital 10,000
Long-term loan 5,000 Machinery 10,000
Funds from
operations(14,500 – 24,500)
10,000
20,000 20,000

20. Q 2. From the following Balance sheet of RR & Co. Ltd., you
are required to prepare (a) Statement of Changes in Working
Capital (b) Fund Flow Statement and (c) Fund From
Operations.
Liabilities
31-3-15
₹
31-3-16
₹
Assets
31-3-15
₹
31-3-16
₹
Equity share
capital
1,00,000 1,00,000 Goodwill 6,000 6,000
General reserve 14,000 18,000 Patents 6,000 6,000
Profit & loss A/c 16,000 13,000 Building 50,000 46,000
Bank overdraft 3,000 2,000 Machinery 27,000 26,000
Sundry creditors 5,000 3,400 Investments 10,000 11,000
Bills payables 1,200 800 Stock 20,000 13,400
Provision for
taxation
10,000 11,000 Bills receivables 12,000 13,200
Provision for
dividend
6,000 7,000 Debtors 18,000 19,000
Provision for
doubtful debts
400 600 Cash at bank 6,600 15,200
Total 1,55,600 1,55,800 Total 1,55,600 1,55,800

21. Additional information :-
• Depreciation charged on machinery ₹ 4,000 and
on Building ₹ 4,000.
• Provision for taxation of ₹ 19,000 was made
during the year 2016.
• Interim dividend of ₹ 8,000 was paid during the
year 2016.

22. Sol:-
Particulars
2015
₹
2016
₹
Increase in
working capital
Decrease in
working capital
Current assets :
Cash at bank 6,600 15,200 8,600
Debtors 18,000 19,000 1,000
Stock 20,000 13,400 - 6,600
Bills receivable 12,000 13,200 1,200
Total (A) 56,600 60,800
Current liabilities :
Bank overdraft 3,000 2,000 1,000
Sundry creditors 5,000 3,400 1,600
Provision for doubtful debts
400 600 - 200
Bills payables 1,200 800 400
Total (B) 9,600 6,800
Working capital ( A - B) 47,000 54,000
Net increase in W.C. 7,000 -
54,000 54,000

23. Particulars
Amount
₹
Net profit As per P&L a/c 13,000
Add : Non-operating/non-cash expenses which was debited in P&L a/c –
a). Depreciation on machinery 4,000
b). Depreciation on building 4,000
c). Interim Dividend paid 8,000
d). Transfer to general reserve 4,000
e). Provision for Tax 19,000
f). Proposed dividend 1,000 40,000
53,000
Less : Non-operating/non-cash expenses which was credited in P&L a/c –
a). Profit & loss a/c (op. balance, 2015) 16,000
Fund From Operation 37,000

24. Source of funds
Amount
₹
Application of funds
Amount
₹
Funds from operations 37,000 Purchase of machinery 3,000
Tax paid 18,000
Investment purchased 1,000
Interim dividend paid 8,000
Net increase in working
capital
7,000
37,000 37,000

26. From the following Balance sheet of Hari & Co. Ltd. as on 31st March 2016 and 2017,
you are required to prepare: (a) Fund From operations (b) A Schedule of Changes in
Working Capital and (c) Fund Flow Statement :
Liabilities
2016
₹
2017
₹
Assets
2016
₹
2017
₹
Share capital 3,00,000 4,00,000 Building 1,20,000 2,50,000
Debentures 2,00,000 2,50,000 Machinery 3,00,000 2,60,000
Profit & loss A/c 40,000 60,000 Stock 90,000 80,000
Creditors 70,000 80,000 Debtors 1,40,000 2,40,000
Bank overdraft 25,000 25,000 Prepaid expenses 15,000 25,000
Provision for
taxation
30,000 40,000
6,65,000 8,55,000 6,65,000 8,55,000
Additional information:-
1. The net profit for the year was ₹ 40,000 after charging depreciation.
2. During the year depreciation charged was ₹ 30,000 on building and ₹ 40,000 on
machinery.
3. The company purchased during the year building worth ₹ 1,60,000
4. Dividend paid during the year amounted ₹ 20,000.

27. Q 2.From the following Balance sheet of Mohan & Co. Ltd. as on 31st December 2013
and 2014, you are required to prepare: (a) Fund From Operations (b) A Statement of
Changes in Working Capital and (c) Fund Flow Statement:
Particulars
Note
no.
31-12-13
₹
31-12-14
₹
Equity Share capital 16,00,000 18,00,000
Preference Share Capital 2,00,000 2,00,000
Reserves & Surplus 5,40,000 6,00,000
Non-Current liabilities 14,40,000 17,00,000
Current liabilities 7,20,000 8,50,000
Non-Current assets 30,60,000 38,00,000
Current assets 14,40,000 18,00,000