Difference Between Funds Flow Statement And Cash Flow Statement
The major dissimilarities or difference between funds flow and cash flow statement can be described as follows:
1. Introduction
Funds Flow Statement: A statement which discloses the source of funds and areas where the received funds are utilized. It explains the change (increase or decrease) in a financial position of a firm between the two balance sheet periods.
Cash Flow Statement: A statement which shows the cash inflows and outflows and discloses the changes in cash balances during a period.
2. Part Of Financial Statement
Funds Flow Statement: No
Cash Flow Statement: Yes
3. Objective/Purpose
Funds Flow Statement: It is prepared to identify the causes of changes (increase or decrease) in working capital.
Cash Flow Statement: It is prepared to identify the causes of change (increase or decrease) in cash equivalents.
4. Concept
Funds Flow Statement: It is a wider concept
Cash Flow Statement: It is a narrow concept
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5. Basis Of Accounting
Funds Flow Statement: Accrual basis accounting system
Cash Flow Statement: Cash basis accounting system
6. Time Range
Funds Flow Statement: It focuses on the long term financial planning
Cash Flow Statement: It focuses in the short-run financial planning
7. Useful For
Funds Flow Statement: It is helpful for capital budgeting decision.
Cash Flow Statement: It is helpful for cash budget.
Funds Flow Vs Cash Flow Statement (Comparison Chart)
I hope this post is helpful to understand the difference between funds flow and cash flow statement and to make comparison between them.
Funds Flow Vs Cash Flow Statement (Comparison Chart)
Basis
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Funds Flow Statement
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Cash Flow Statement
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Introduction
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Statement that explains the source of fund and areas where the funds are utilized
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Statement that explains cash inflows and outflows during a period
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Part Of Financial Statement ?
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No
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Yes
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Objective/Purpose
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To identify the causes of change in working capital
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To identify the causes of change in cash equivalents
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Concept
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Wider
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Narrow
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Accounting Basis
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Accrual Basis
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Cash Basis
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Time Range
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Long-term planning
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Short-term planning
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Useful For
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Capital budgeting
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Cash budget
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I hope this post is helpful to understand the difference between funds flow and cash flow statement and to make comparison between them.
