Funds flow statement query

A/c entries 537 views 1 replies

Why decrease in net working capital is considered as a source of funds?

Replies (1)

WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES

DECREASE IN WORKING CAPITAL MEANS:-

  1. EITHER DECREASE IN CURRENT ASSETS
  2. OR INCREASE IN CURRENT LIABILITIES.

EXAMPLE: 

DECREASE IN CURRENT ASSETS

  • DEBTORS (31.03.2011) = RS. 20,000
  • DEBTORS (31.03.2012)= RS. 10,000  ==> SOME MONEY RECEIVED FROM DEBTORS ==> FUND
  • DECREASE IN WC = RS. 10,000

INCREASE IN CURRENT LIABILITIES

  • CREDITORS (31.03.2011) = RS. 50,000
  • CREDITORS (31.03.2012) = RS. 80,000 ==> SOME MONEY RECEIVED FROM CREDITORS==> AGAIN FUND
  • INCREASE IN WC = RS. 30,000

 

I HOPE YOU UNDERSTOOD!!!!

  •  

 

 


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured 14 March 2026
Article Trainee

N N V Satish&co

Hyderabad

CA Inter

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details