Difference Between Balance Sheet And Funds Flow Statement

Difference Between Balance Sheer And Funds Flow Statement

The main dissimilarities or difference between balance sheet and funds flow statement can be pointed out as follows:

1. Meaning

Balance Sheet: A statement prepared to show the total assets, total liabilities and capital at the end of the accounting period.

Funds Flow Statement: A statement prepared to show the source of fund (inflow of capital) and the area of utilization (outflow of fund) during a stated period.

2. Purpose

Balance Sheet: To reveal the financial health (financial position) of the firm

Funds Flow Statement: To show the source of fund and its application.

3. Basis

Balance Sheet: Prepared on the basis of trial balance data.

Funds Flow Statement: Prepared on the basis of balance sheet data of two consecutive periods.

4. Nature

Balance Sheet: Static

Funds Flow Statement: Dynamic

5. Statutory

Balance Sheet: Yes

Funds Flow Statement: No

6. Users/Audience

Balance Sheet: It's information is useful for both internal users such as employees, management, directors etc. and external users such as government, shareholders, creditors etc.

Funds Flow Statement: Used by top management only

7. Concept

Balance Sheet: It follows stock concept

Funds Flow Statement: It follows flow concept

8. Format/Procedure

Balance Sheet: A prescribed format and procedure should be used while preparing balance sheet.

Funds Flow Statement: No prescribed format and procedure needed.

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Difference Between Balance Sheet And Statement Of Affairs

9. Preparation Time

Balance Sheet: Should be prepared at the end of every accounting year.

Funds Flow Statement: It can be prepared according to the need of the management.

10 Publication Of Report

Balance Sheet: Necessary to publish balance sheet report

Funds Flow Statement: No need to publish funds flow report

Balance Sheet Vs Funds Flow Statement (Comparison Chart)

Basis For Difference	Balance Sheet	Funds Flow Statement
Introduction	Statement that shows total assets and liabilities of the firm at the end of the financial period	Statement that shows the inflow and outflow of the funds during a certain period
Purpose	To know the financial position	To know the source and application of fund
Statutory Or Not	Yes	No
Users/Audience	Internal and external users	Top level management
Nature	Static	Dynamic
Data Used From	Trial balance	Balance sheets of two periods
Concept	Stock concept	Flow concept
Prescribed Format	Yes	No
Time Of Preparation	At the end of accounting period	According to the need
Report Publication	Required	Not required

I hope this post is helpful to understand the difference between balance sheet and funds flow statement and to make comparison between them.