At the end of each accounting period, preparation and presentation of financial statements are undertaken with an objective of providing as much information as possible for the public.
The balance sheet presents a snapshot picture of the financial position at a given point of time and the income statement shows a summary of revenues and expenses during the accounting period. Though these are significant statements especially in terms of the principal goals of the enterprise, yet there is a need for one more statement which will indicate the changes and movement of funds between two balance sheet dates which are not clearly mirrored in the balance sheet and income statement. That statement is called as funds flow statement. The analysis which studies the flow and movement of funds is called as funds flow analysis. Similarly one more statement has to be prepared known as cash flow statement. This requires the doing of cash flow analysis. The focus of cash flow analysis is to study the movement and flow of cash during the accounting period. This lesson deals at length both the analyses.
ՖՖ After reading this lesson, the reader should be able to
ՖՖ understand the concept of funds and flow.
ՖՖ evaluate the changes in working capital in an organization.
ՖՖ ascertain the sources and uses of funds from a given financial
ՖՖ prepare fund flow statement.
ՖՖ understand the concepts of cash and cash flow.
ՖՖ understand the cash flow analysis.
1 Concept Of Funds
2. Flow Of Funds
3 Importance And Utility Of Funds Flow Analysis
4 Preparation Of Funds Flow Statement
6 Meaning Of Concepts Of Cash, Cash Flow And Cash Flow Analysis
7 Cash Flow Statement
8 Calculation Of Cash From Operations
9 Utility Of Cash Flow Analysis
10 Cash Flow Analysis Vs. Funds Flow Analysis
13 Case Analysis