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Difference Between Cash Flow and Fund Flow Statement

The document compares cash flow statements and fund flow statements. Cash flow statements focus on the actual inflow and outflow of cash from operating, investing, and financing activities. They are useful for short-term planning and have a prescribed format. Fund flow statements focus on changes in working capital and are useful for medium and long-term planning, but do not have a prescribed format. Cash flow statements are considered more useful for analyzing a business's liquidity.

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Atul Mani
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389 views3 pages

Difference Between Cash Flow and Fund Flow Statement

The document compares cash flow statements and fund flow statements. Cash flow statements focus on the actual inflow and outflow of cash from operating, investing, and financing activities. They are useful for short-term planning and have a prescribed format. Fund flow statements focus on changes in working capital and are useful for medium and long-term planning, but do not have a prescribed format. Cash flow statements are considered more useful for analyzing a business's liquidity.

Uploaded by

Atul Mani
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Difference between cash flow and fund flow statement 1)Concept:Cash flow:- Cash flow statement is based on the

concept of cash or cash equipments Fund flow:- fund flow statement is based on the concept of working capital 2)Statement of change in working capital:Fund flow:- a statement of schedule of change of change in working capital is prepared separately Cash flow:- no such statement is prepared 3)Long term planning and short term planning:Cash flow:- cash flow is a a tool of financial analysis , useful for short term cash planning. Fund flow:- it is useful in medium term and long term financial planning. 4)Focus:-

Cash flow:- it focuses the effect of operating, investing and financial activity of a business on the flow of cash. Fund flow statement:- it focuses on the change in working capital during an accounting period. 5)Prescribed format:Cash flow:- cash flow statement has to be prepared in the format given in AS-3 Fund flow:-no such proforma is prescribed for the preparation of fund flow statement. 6)Practical utility:Cash flow:- all the renowned institute of accountancy like SEBI ,etc have accepted cash flow more useful from the view of analysis of liquidity of a business firm. Fund flow:- it has been given less importance.

Cash flow statement Cash is the most important thing for any business. It is the life blood of any business establishment. It plays a very important role in the day to day operation of any business concern. To analyse any business concern it is very important to know what were the balance of cash in the starting of the business and at the end of any particular period, what were the sources of cash and in which kind of activities this inflow was utilised. All the above factors are analysed through the technique of cash flow statement. Cash flow statement shows the inflow and outflow of cash during a particular accounting period. Cash means cash and cash equivalents and flow means movement of cash According to AS-3 cash flow is classified into 3 main activities:i) Operating activities ii) Investing activities iii) Financing activities

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