Difference Between Income Statement And Funds Flow Statement
The main dissimilarities or difference between income statement and funds flow statement can be pointed out as follows:
1. Meaning
Income Statement: It is a summary of total revenue and expenses for a particular accounting period.
Funds Flow Statement: It is a statement showing the source (inflow) and application (outflow) of funds for a particular period.
2. Purpose/Objective
Income Statement: To know the financial results (profit or loss) the business
Funds Flow Statement: To disclose the changes in assets, liabilities and capital and analyze the operational position of the firm.
3. Preparation
Income Statement: Balance or data of nominal accounts are used to prepare income statement.
Funds Flow Statement: Balance sheet of two consecutive periods are used to prepare funds flow statement.
4. Prescribed Format
Income Statement: Prescribed format should be used while preparing income statement
Funds Flow Statement: No need of prescribed format to prepare funds flow statement
5. Users/Audience
Income Statement: It is used by both internal and external users of business firm
Funds Flow Statement: It is used by top level management only
6. Publication
Income Statement: It should be published
Funds Flow Statement: No need to publish
Also Read:
Also Read:
7. Measurement
Income Statement: It measures the profit and loss of the business
Funds Flow Statement: It measures the changes of working capital for the specific period
8. Helpful
Income Statement: It is helpful in preparing funds flow statement
Funds Flow Statement: Not helpful in preparation of income statement.
Income Statement Vs Funds Flow Statement (Comparison Chart)
I hope this post is helpful to understand the difference between income statement and funds flow statement and to make comparison between them.
Income Statement Vs Funds Flow Statement (Comparison Chart)
Basis For Difference
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Income Statement
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Funds Flow Statement
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Introduction
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Summary of revenue and expenses of the firm
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Statement that shows the inflow and outflow of funds
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Purpose
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To determine profit or loss
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To analyze the operational position
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Data Used From
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Nominal accounts or balance sheet
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Balance sheets of two periods
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Prescribed Format
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Yes
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No
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Users
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Internal and external users
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Top management
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Publication Required ?
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Yes
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No
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Measurement
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Profit or loss
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Change in working capital
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I hope this post is helpful to understand the difference between income statement and funds flow statement and to make comparison between them.
