Fund&Cash Flow

Presentation by

Ikjsl@yahoo.co.in

STATEMENT SHOWING CHANGES IN FINANACIAL POSITION

IKJ SAMUEL

Statement of sources & application of funds

• SOURCES• FUNDS FROM OPERATION ISSUE OF SHARES• ISSUE OF DEBENTURES• LONG TERM LOANS• SALE OF FIXED ASSETS

&OTHER INVESTMENTS• NON TRADING RECEIPTS

• APPLICATION PUCHASE OF FIXED ASSETS

&INVESTMENTS• REDEMPTION OF

PREFERENCE SHARES &DEBENTURES

• REPAYMENT OF LONG TERM LOANS

• PAYMENT OF DIVIDENTS• PAYMENT OF TAXES• LOSS FROM OPERATIONSDECREASE IN WORKING CAPITAL

INCREASE IN WORKINGCAPICAPITAL

If the sources exceeds application,it increases working capitalAnd vice versa

SOURCESSOURCES AND APPLICATION OF CASH AND APPLICATION OF CASH

DERIVATION OF CASH• OPERATING PROFIT• DECREASE IN ASSET

EXCEPT CASH• INCREASE IN ANY

LIABILITY• ISSUE OF SHARES• RENT,INTEREST

&DIVIDEND RECEIVED

DISPOSITION OF CASH

• OPERATING LOSS• INCREASE IN ASSET

EXCEPT CASH• DECREASE IN ANY

LIABILITY• REDEPTION OF

SAHRES &DEBENTURES

• CASH DIVIDEND PAID

(Account form)

INFLOW OF CASH Cash from operations Issue of shares

&debentures Barrowing of L.T. Loans Sale of fixed assets

&investments Non-trading receipts e.g.

dividend,rent, etc.

DECREASE IN CASH BALANCE

• OUTFLOW OF CASH• Loss from operations• Purchase of shares &

debentures• Repayment of LT loans• Purchase of fixed assets

&investments• Payment of dividends &

taxes• INCREASE IN CASH

BALANCE

(Report form)

INFLOW OF CASH Cash from operations Issue of shares &debentures Long term loans &sale of fixed assets,investments Non trading receipts ------------------- -------------------

• Outflow of cash• Loss from operations• Redemption of shares & debentures• Repayment of L.T. loans &purchase of fixed assets• Payment dividend &taxes• ----------------• ----------------

INCREASE/ DECREASE IN CASH BALANCE

Instead of showing increase or decrease in cash balance the statement may start withOpening balance of cash & reach closing balance of cash through inflows &outflows

PREPERATION OF FUND FLOW STATEMENT

Requirements:1.Balance sheets of the current &previous years

2.Adjustments which are to be incorporated.

Classification of‘Assets’ & ‘liabilities’Preparation of schedules

1.schedule of changes in working capital…. to find ‘increase/decrease in working capital

2.’Adjusted profit &loss account’…. to find “Funds from operations”or”loss in operations”

3. ‘Ledger accounts’…..

to find i)Application of funds,ii)Sources of funds iii)Transfer of accounts

CLASSIFICATION OF ASSETS AND LIABILITES

• ASSETS1.Current assets: Stock,debtors,B/R,short -

term investments,cash.2.Non-current assets: Fixed assets,long term

investments.3.Intangible assets: Goodwill,Patents etc.,4.Fictious assets: P/L a/c,preliminary exp.,

Discount on shares etc.

• LIABILITIES1.Current liabilities: Creditors,bank

o/d,B/R, short term loans etc.,

2.Non-current liabilities:

Share capital,Reserves &surplus,Provision etc.,

Long term liabilities

SCHEDULE OF CHANGES IN WORKING CAPITAL

PREPARE THE SCHEDULE WITH FOLLOWING RULE:

INCREASE IN CURRENT ASSETS& DECREASE IN CURRENT LIABILITIES

Increases the working capital DECREASE IN CURRENT ASSESTS& INCREASE IN CURRENT LIABILITIESDecreases the working capital

LEDGER ACCOUNTSTo Opening balance By Bank-sale (S)To Bank-purchases (A) By Adj.P/L a/c-depreciationTOAdj.P/L a/c-profit onsale By Adj.P/L a/c-loss on sale -------- --------

To Bank-payment(A) By Opening balanceTo Closing balance By Adj.P/L a/c-transfer(T) By Barrowings(S) ---------- ------- ---------- -------

ASSETS A/C

LIABILITIES A/C

BALANCE IN ACCOUNTS Would be ‘sale’ or’purchase’ or transfer

ADJUSTED PROFIT &LOSS ACCOUNT

To Depreciation- fixed asset a/c

To Loss on sale of fixed asset

To Goodwill written offTo Preliminary expensesTo General reserveTo Dividend paidTo Provision for taxationTo BALANCE c/f --------- ---------

By BALANCE b/dBy Profit on sale of fixed assets By Dividend,Interest

re ceived etc.By Profit on redemption of shares

&debentures

By ‘FUNDS FROM OPERATIONS’ ** ----------- ------------

---------- ---------

**Balancing figure

CALCULATION OF CASH FROM OPERATIONSADJUSTMENTS TO CONVERT FROM ACCRUAL BASIS TO CASH BASIS

FUNDS FROM OPERATIONS-(Adj.P/L a/c ) *****

Working capital changes requiring cash orNot providing cash:INCREASE IN CURRENT ASSETS &DEREASE IN CURRENT LIABILITIES ***** --------

Working capital changes providing cashOr not requiring cash

DECREASE IN CURRENT ASSETS &INCREASE IN CURRENT LIABILITIES ***** --------- *****

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