Cash Flow, Funds Flow and Balance Sheet

CASH FLOW STATEMENT : Cash Flow statement is prepared for analysing operation and inflow outflow of cash flows in particular period of time.t is not mandatory for all companies to prepare. ICAI has issued AS-3 in this regards.

Fund Flow : Fund flow statement is a managment tool for analysis of Source of Funds and applications of funds. It is not compulsory for any entity to prepare. Also there is no guidance issued in this regards. in it a managment accounting tool.

Balance sheet: It is a Possition of a entity at particular point in time showing assets and liability of entity. it is compulsory for the companies to prepare balancesheet on year ending.

Regards

Madhusudan

Laxmi Madhusudhan has given the perfect explanation.

I will explain these terms in a simple manner.

See B/s tell us the financial position of an enterprise at a particular date. For e.g.  opening and closing B/s on 1.04.10 & 31.03.11 respectively.

But now people will ask how the B/s at 31.03.11 has come. What changes have taken place in whole year to reach at such B/s from the opening one.

For determination of such changes we prepare schedule of change in financial position.

If it is on cash basis we name it as Cash Flow and if it is on fund basis we call Funds Flow.

Funds here means working capital. Flow means change.