fund&cash flow

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Basics for the preparation of Fund flow statement

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  • 1. Presentation by [email_address] IKJ SAMUEL
    • STATEMENT SHOWING CHANGES IN FINANACIAL POSITION

FUND FLOW &CASH FLOW STATEMENT 2. IKJ SAMUEL 3. 4. 5. Statementof 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 OPERATIONS
  • DECREASE IN WORKING CAPITAL
  • INCREASE IN WORKINGCAPICAPITAL
  • If the sources exceeds application,it increases working capital
  • And vice versa

6. 7. SOURCESAND APPLICATION OF CASH

  • DERIVATION OF CASH
  • OPERATING PROFIT
  • DECREASE IN ASSET EXCEPT CASH
  • INCREASE IN ANYLIABILITY
  • 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

CSAH 8. ( 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

CASH FLOW STATEMENT 9. (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
  • ----------------
  • ----------------

CASH FLOW STATEMENT INCREASE/ DECREASE IN CASH BALANCE

  • Instead of showing increase or decrease in cash balance the statement may start with
  • Opening balance of cash & reach closing balanceofcash through inflows &outflows

10. PREPERATION OF FUND FLOW STATEMENT

  • Requirements:
  • 1.Balance sheets of the current &previous years
  • 2.Adjustments which are to be incorporated.
  • Classification ofAssets & 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 operationsorloss in operations
  • 3.Ledger accounts..
  • to find i)Application of funds,ii)Sources of funds
  • iii)Transfer of accounts

11. CLASSIFICATION OF ASSETS AND LIABILITES

  • ASSETS
  • 1. 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.
  • LIABILITIES
  • 1 .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

12. 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 LIABILITIES
  • Decreases the working capital

13. 14. LEDGER ACCOUNTS

  • To Opening balanceBy Bank-sale (S)
  • To Bank-purchases (A)By Adj.P/L a/c-depreciation
  • TOAdj.P/L a/c-profit onsaleBy Adj.P/L a/c-loss on sale
  • ----------------
  • To Bank-payment(A)By Openingbalance
  • To Closing balanceBy Adj.P/L a/c-transfer(T)
  • By Barrowings(S)
  • -----------------
  • -----------------

ASSETS A/C LIABILITIES A/C BALANCE IN ACCOUNTS Would be sale orpurchase or transfer 15. ADJUSTED PROFIT &LOSS ACCOUNT

  • To Depreciation-fixed asset a/c
  • To Loss on sale of fixedasset
  • To Goodwill written off
  • To Preliminary expenses
  • To General reserve
  • To Dividend paid
  • To Provision for taxation
  • To BALANCE c/f
  • ---------
  • ---------
  • By BALANCE b/d
  • By Profit on sale offixed assets
  • By Dividend,Interest
  • re ceived etc.
  • By Profit on redemption of shares &debentures
  • By FUNDS FROM OPERATIONS **
  • -----------
  • ------------
  • -------------------

**Balancing figure 16. CALCULATION OF CASH FROM OPERATIONS ADJUSTMENTS TO CONVERT FROM ACCRUAL BASIS TO CASH BASIS FUNDS FROM OPERATIONS-(Adj.P/L a/c )***** LESS Working capital changes requiring cash or Not providing cash : INCREASE IN CURRENT ASSETS & DEREASE IN CURRENT LIABILITIES***** -------- ADD: Working capital changes providing cash Or not requiring cash DECREASE IN CURRENT ASSETS & INCREASE IN CURRENT LIABILITIES ***** --------- ***** CASH FROM OPERATIONS *****