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Cash Flow Statement


Cash flow statement is a statement which shows the sources of cash inflow and uses of
cash out-flow of the business concern during a particular period of time. It is the statement,
which involves only short-term financial position of the business concern. Cash flow
statement provides a summary of operating, investment and financing cash flows and
reconciles them with changes in its cash and cash equivalents such as marketable securities.
Institute of Chartered Accountants of India issued the Accounting Standard (AS-3) related
to the preparation of cash flow statement in 1998.

Cash Flow Statement
[Post Image Courtesy of Pong at FreeDigitalPhotos.net]

Difference Between Funds Flow and Cash Flow Statement:

1. Funds flow statement is the report on the movement of funds or working capital while the Cash flow statement is the report showing sources and uses of cash.

2. Funds flow statement explains how working capital is raised and used during the particular period while the Cash flow statement explains the inflow and out flow of cash during the particular period.

3. The main objective of fund flow statement is to show the how the resources have been balance, mobilized and used while the main objective of the cash flow statement is to show the causes of changes in cash between two balance sheet dates.

4. Funds flow statement indicates the results of current financial management while the Cash flow statement indicates the factors contributing to the reduction of cash balance in spite of increase in profit and vice-versa.

5. In a funds flow statement, increase or decrease in working capital is recorded while In a cash flow statement, only cash receipt and payments are recorded.

6. In funds flow statement, there is no opening and closing balances while a Cash flow statement starts with opening cash balance and ends with closing cash balance.

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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