3. Meaningoffundsflowofstatement
A Funds Flow Statement is
prepared in summary form to
indicate changes occurring in items
of financial conditions between
two different Balance Sheet
dates.
4. Objectives
i. To find out the position of working capital
on two dates of balance sheets.
ii. To know the changes in working capital
during this period.
iii. To know the causes of changes in working
capital .
iv. To know the inflow of funds according to
their sources.
v. To know the item-wise outflow of funds
during this period.
5. Importance
Importance of management
Importance for shareholders
Importance for Financiers
Importance to other parties
6. LimitationsofFundsFlowStatement
i. Not a Substitute of Annual Accounts
ii. Historic in nature
iii. Less Importance to Changes in Cash
iv. Not an Original Financial Statement
v. Ignores Non-fund Transactions
7. PreparationofFundsFlowStatement
i. Balance Sheet at the beginning of the year
(or last year’s Balance Sheet).
ii. Balance Sheet at the end of the year (or
Current year’s Balance Sheet).
iii. Income statement or Profit & loss A/c of
the current year.
iv. Any other formation which affects the flow
of funds.
11. conclusion
Fund flow statement is very important for every
organization .It can really determine how the
business should be carried on in the future. As we
know the aim of fund flow statement is to know
the working capital of the company whether it
increases or decreases during a given period of
time. So it is a main tool to make a organization to
survive in the future.
