Page 147 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers Manpreet Kaur, Lovely Professional University

Notes Unit 7: Fund Flow Statement

CONTENTS
Objectives
Introduction

7.1 Meaning of Fund Flow Statement
7.2 Objectives of Fund Flow Statement Analysis
7.3 Steps in the Preparation of Fund Flow Statement

7.4 Schedule of Changes in Working Capital
7.5 Methods of Preparing Fund from Operations
7.5.1 Net Profit Method
7.5.2 Sales Method
7.6 Advantages of Preparing Fund Flow Statement

7.7 Limitations of Fund Flow Statement
7.8 Summary
7.9 Keywords

7.10 Self Assessment
7.11 Review Questions
7.12 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the objectives of fund flow statement analysis

State the steps in the preparation of fund flow statement
Prepare schedule of changes in working capital
List the methods of preparing fund from operations

Explain the advantages of preparing fund flow statement
Know the limitations of fund flow statement.

Introduction

Every business establishment usually prepares the balance sheet at the end of the fiscal year
which highlights the financial position of the yester years It is subject to change in the volume
of the business not only illustrates the financial structure but also expresses the value of the
applications in the liabilities side and assets side respectively. Normally, Balance sheet reveals
the status of the firm only at the end of the year, not at the beginning of the year. It never
discloses the changes in between the value position of the firm at two different time
periods/dates.

142 LOVELY PROFESSIONAL UNIVERSITY