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Funds flow :financial management ipcc gp1

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Rishi

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110 Points Posted on 01 August 2015

1.Source of funds:means those transaction which causes an increase in Current Assets

2.Application of Funds::means those transaction which causes a decrease in Current Assets

an increase or decrease in current liability without corrosponding increase/decrease in current asset is not a source/application!

Am I right in My understanding? plz help!

any one?plz!!!!!!

Replies (1)

Guest

Posted on 02 August 2015

Sources of Fund-Any transcation which increases the amount of working capital is a source of working capital .The working capital increases if a transcation increases current assets or decreases current liabilities.Example-Issues of shares for cash.

Application of funds-Any transcation which decreases the amount of working capital is an application of working capital .The working capital decreases if a transcation decreases current assets or increases current liabilities.Example-Redemption of Preference share for cash.