Description
Describing the fund flow statements and scientific methods of preparation of fund flow statement. It also explains importance and need of fund flow statement.
FUND FLOW STATEMENT
Scientific methods of preparation of Fund Flow Statement
FORMAT OF SCHEDULE OF CHANGES IN WORKING CAPITAL
Funds from operations
• Direct method • Indirect method
Direct method
Funds from operations = Funds from operating revenue less funds for operating expenses
Funds from operations
Profit & Loss Adjustment Account To Net Profit ( given ) To Non - Cash Expenses Depreciation Written off entries To Loss on sale of assets To Tax To Dividends To Transfer to reserves
Profit & Loss Adjustment Account
Revaluation of assets ** ** ** By Profits on sale of assets ** By Dividend received ** ** By Funds from Operations ** Revaluation of investments
** By Non- Cash income
** **
**
** **
Statement of Adjustment
• Net Profit as per Profit & Loss Account
Add: Non- Cash and non – operating expenses & Appropriations Less : Non-cash and non- operating income Funds from operations
**
**
** **
Format of Fund Flow Statement
Sources / Inflow Funds from Operations Sale of fixed assets Rs Applications/Outflow ** Funds lost in operations ** Purchase of fixed assets Rs ** **
Sale of Investments Issue of shares
Issue of debenture Loan taken Dividend Received Non-Operating income Decrease in working capital
** Purchase of investments ** Redemption of preference shares
** Redemption of debenture ** Loan repaid ** Dividend paid ** Non – operating expenses ** Increase in working capital **
** **
** ** ** ** ** **
Need for fund flow statement
1. 2. Shortcomings in Balance Sheet Shortcomings in Profit & Loss Account
Importance of Fund Flow Statement
1. Gives information about amount of working capital and changes in the amount of working capital. 2. It analyses Balance sheet to reveal the financing & investing activities. 3. It analyses the Profit & Loss Account to reveal the effect of business activities of the concern on the flow of funds. 4. It is a tool for planning future activities of business.
doc_922723386.pptx
Describing the fund flow statements and scientific methods of preparation of fund flow statement. It also explains importance and need of fund flow statement.
FUND FLOW STATEMENT
Scientific methods of preparation of Fund Flow Statement
FORMAT OF SCHEDULE OF CHANGES IN WORKING CAPITAL
Funds from operations
• Direct method • Indirect method
Direct method
Funds from operations = Funds from operating revenue less funds for operating expenses
Funds from operations
Profit & Loss Adjustment Account To Net Profit ( given ) To Non - Cash Expenses Depreciation Written off entries To Loss on sale of assets To Tax To Dividends To Transfer to reserves
Profit & Loss Adjustment Account
Revaluation of assets ** ** ** By Profits on sale of assets ** By Dividend received ** ** By Funds from Operations ** Revaluation of investments
** By Non- Cash income
** **
**
** **
Statement of Adjustment
• Net Profit as per Profit & Loss Account
Add: Non- Cash and non – operating expenses & Appropriations Less : Non-cash and non- operating income Funds from operations
**
**
** **
Format of Fund Flow Statement
Sources / Inflow Funds from Operations Sale of fixed assets Rs Applications/Outflow ** Funds lost in operations ** Purchase of fixed assets Rs ** **
Sale of Investments Issue of shares
Issue of debenture Loan taken Dividend Received Non-Operating income Decrease in working capital
** Purchase of investments ** Redemption of preference shares
** Redemption of debenture ** Loan repaid ** Dividend paid ** Non – operating expenses ** Increase in working capital **
** **
** ** ** ** ** **
Need for fund flow statement
1. 2. Shortcomings in Balance Sheet Shortcomings in Profit & Loss Account
Importance of Fund Flow Statement
1. Gives information about amount of working capital and changes in the amount of working capital. 2. It analyses Balance sheet to reveal the financing & investing activities. 3. It analyses the Profit & Loss Account to reveal the effect of business activities of the concern on the flow of funds. 4. It is a tool for planning future activities of business.
doc_922723386.pptx