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Cost and Management Accounting

Notes Fund from Operations: Income generated from only operations.

Fund Lost in Operations: Loss incurred in the operations.
Increase in Working Capital: Increase in Net working capital i.e. Excess of current assets over the
current liabilities- Applications side of the fund fl ow.
Non-current Assets: Long-term assets.

Non-current Liabilities: Long-term fi nancial resources.
Statement of changes in Working Capital: Enlisting the changes taken place in between the
current assets and current liabilities of two different time horizons.

12.7 Review Questions

1. From the following two balance sheet as at December 31, 2004 and 2005. Prepare the
statement of sources and uses of funds.

2004 (`) 2005 (`) 2004 (`) 2005 (`)
Liabilities
Share capital 80,000 90,000
Trade creditors 20,000 46,000
Profit & Loss a/c 4,60,000 5,00,000

Assets
Cash 60,000 94,000
Debtors 2,40,000 2,30,000
Stock in trade 1,60,000 1,80,000
Land 1,00,000 1,32,000
5,60,000 6,36,000 5,60,000 6,36,000
2. Balance sheets of M/s Black and White as on 1-1-2006 and 31-12-2006 were as follows:
Balance Sheet

Liabilities 1-1-2006 31-12-2006 Assets 1-1-2006 31-12-2006
(`) (`) (`) (`)
Creditors 40,000 44,000 Cash 10,000 7,000
Mrs.Whites’Loan 25,000 - Debtors 30,000 50,000
Loan from P.N.Bank 40,000 50,000 Stock 35,000 25,000
Captial 1,25,000 1,53,000 Machinery 80,000 55,000
Land 40,000 50,000
Building 35,000 60,000
2,30,000 2,47,000 2,30,000 2,47,000
Additional Information:
(a) During the year machine costing ` 10,000 (accumulated depreciation ` 3,000) was
sold for ` 5,000.
(b) The provision for depreciation against machinery as on 1-1-2006 was ` 25,000 and on
31-12-2006 ` 40,000.
(c) Net profit for the year 2006 amounted to ` 45,000.

You are required to prepare funds fl ow statement.

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