Page 86 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 5: Fund Flow Statement

Notes
Example: From the following details calculate funds from operations:
`
Salaries 10,000

Rent 6,000
Refund of Tax 6,000

Profit on Sale of Building 10,000
Depreciation on Plant 10,000
Provision for Taxation 8,000

Loss on Sale of Plant 4,000
Closing Balance of Profit & Loss A/c 1,20,000

Opening Balance on Profit & Loss A/c 50,000
Discount on Issue of Debentures 4,000

Provision for Bad Debts 2,000
Transfer to General Reserve 2,000
Preliminary Expenses written off 6,000
Goodwill written off 4,000
Dividend Received 10,000
Proposed Dividend 12,000

Solution:

Calculation of fund from operation
First Method
Closing Balance of Profit & Loss A/c 1,20,000

Less: Opening Balance 50,000
Balance Forward 70,000
Add: Non-fund/Non-operating Charges

Depreciation on Plant 10,000
Provision for Taxation 8,000
Loss on Sale of Plant 4,000
Discount on Issue of Debentures 4,000

Provision for Bad Debts 2,000
Transfer to General Reserve 2,000
Preliminary Expenses off 6,000
Goodwill Written off 4,000
Proposed Dividend 12,000

1,22,000

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