DIFFERENCE BETWEEN FUNDS FLOW STATEMENT AND INCOME STATEMENT

FUNDS FLOW STATEMENT STATEMENT DEALS WITH THE FINANCIAL RESOURCES. MATCHES THE FUNDS WITHOUT MAKING DISTINCTION. PREPARED BEFORE THE ACTUAL OPERATIONS. PREPARED EVERY MONTH. DEPICTS THE POSITION OF WORKING CAPITAL. INCOME STATEMENT STATEMENT DISCLOSES THE OPERATING RESULT . MATCHES THE COST OF SOLD. ALWAYS PREPARED AFTER THE ACTUAL OPERATIONS. PREPARED AFTER SIX MONTHS OR A YEAR. DEPICTS THE PROFIT OR LOSS MADE.

 IT IS MORE RELIABLE . ITS SCOPE IS LIMITED.

IT IS NOT VERY RELIABLE. ITS SCOPE IS WIDE.

INCREASE IN WORKING THE NET PROFIT AND CAPITAL AND DECREASE NET LOSS. IN WORKING CAPITAL.

SCHEDULE OF CHANGES IN WORKING CAPITAL

THIS STATEMENT IS PREPARED FROM CURRENT ASSETS AND CURRENT LIABILITIES. THERE ARE SOME RULES FOR PREPARING THIS STATEMENT: INCREASE CURRENT ASSETS INCREASES WORKING CAPITAL. DECREASE IN CURRENT ASSETS DECREASES WORKING CAPITAL. INCREASE IN CURRENT LIABILITIES DECREASES WORKING CAPITAL. DECREASE IN CURRENT LIABILITIES INCREASES WORKING CAPITAL.

PARTICULARS CURRENT ASSETS: CASH DEBTORS STOCK

PYF (RS)

CYF (RS)

CHANGES IN WC INCREASE DECREASE

10000 20000 15000

15000 10000 18000

5000 3000

10000

CURRENT LIABILITIES: PROVISION FOR DOUBTFUL DEBTS 100 B/P 10000 BANK OVER-DRAFT OR LOANS 1000

500 8000 1200

2000

400

200

USES OF FUNDS FLOW STATEMENT

IT EXPLAINS THE FINANCIAL CONSEQUENCES OF BUSINESS OPERATION. IT ANSWERS INTRICATE QUERRIES. ACTS AS AN INSTRUMENT OF RESOURCES.

1.

IT EXPLAINS THE FINANCIAL CONSEQUENCES OF BUSINESS OPERATION: IT HELPS FINANCIAL ANALYST TO ADVICE HIS EMPLOYER CLIENT REGARDING DIRECTING THE FUNDS TO THOSE CHANNELS WHICH ARE MORE PROFITABLE FOR THE BUSINESS. IT ANSWERS INTRICATE QUERRIES: WHAT IS THE OVERALL CREDIT-WORTHINESS OF THE ENTERPRISE,WHAT ARE THE SOURCES OF REPAYMENT OF THE LOANS. ACT AS AN INSTRUMENT OF RESOURCES: TELL THE SOURCES WHERE FROM FUNDS HAVE BEEN OBTAINED.

2.

3.