Page 84 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 5: Fund Flow Statement

Notes
!
Caution The fi rst method is widely used method by all in determining the volume of
Fund from Operations (FFO).

5.3.1 Net Profi t Method

Under the Net Profit Method, fund flow from operations can be computed. Under this method,

fund from operations can be determined in two different ways The fi rst method is through the
statement format

Net Profit from the Profit & Loss A/c xxxxx
Add:
1. Non-funding Expenses:
Loss on Sale of Fixed Assets xxxx
Loss on Sale of Long-term Investments xxxx
Loss on Redemption Debentures/Preference Shares xxxx
Discount on Debentures/Share xxxx

2. Non-operating Expenses:
Depreciation of Fixed Assets xxxx
3. Intangible Assets:
Amortization of Goodwill xxxx

Amortization of Patent xxxx
Amortization of Trade Mark xxxx
4. Fictitious Assets:
Writing off Preliminary Expense xxxx
Writing off Discount on Shares/Debentures xxxx

5. Profi t Appropriation
Transfer to General Reserve xxxx
Less:
6. Non-funding Profi ts:

Profit on Sale of Fixed Assets xxxx

Profit on Sale of Long-term Investments xxxx

Profit on Redemption Debentures/Preference Shares xxxx
7. Non-operating Incomes:
Dividend Received xxxx
Interest Received xxxx

Rent Received xxxx
Fund From Operations/Fund Lost in Operations xxxxx

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