Difference WikiAccounting

Difference Between Cash Flow Statement and Fund Flow Statement

Main Difference

The main difference between Cash Flow Statement and Fund Flow Statement is that the Cash Flow Statement shows the inflows and outflows of cash, whereas the Fund Flow Statement shows the causes and requests of funds.

Cash Flow statement vs. Fund Flow Statement

The cash flow statement indicates the variations in the cash position, and shows the arrivals and losses of cash of a firm; whereas fund flow statement shows the ups and downs of the fiscal position of a firm, it shows the sources and application of funds. The cash flow statement is an investigative resolution statement that describes the details for the differences between the opening and closing cash balances over a period, while the fund flow statement shows the changes in the working capital of the entity between the two financial years.

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The cash flow statement refers to the total cash created by the firm in a particular accounting period, whereas, the fund flow statement of the company shows the movement of the cash in and cash out from the company during the particular period. The cash flow statement is quite dominant and useful when one wants to know about the running position of a company, while the fund flow statement talks about the financial situation.

Short term monetary schedule is completing through the cash flow statement, whereas medium-term and extensive-term fiscal plan is completing through funds flow statement. In the cash flow statement, cash, which is getting from the operation is computing, while in fund flow statement funds which are getting from action is calculating. The cash flow statement is using to prepare the cash budget, whereas the fund flow statement is using to make the capital budget. The cash flow statement depends on the cash concept, while the funds’ flow statement depends on the accumulation concept.

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Comparison Chart

Cash Flow StatementFund Flow Statement
Cash flow statement shows inflows and outflows of cash and cash parallels over a periodFund flow statement shows the changes in the fiscal position of the object in diverse accounting years
Source of Accounting
CashEnlargement
Part of Financial Statement
YesNo
Used For
Cash budgetingCapital budgeting
Objective
Shows the liquidity of the companyStudies the fiscal point of the firm
Exploration
A short term of cash planningA long time of financial planning
Calculation
Cash from procedureFund from procedure

What is the Cash Flow Statement?

A cash flow statement is a statement that is presenting variations in cash situation of the firm from one period to another, which means it is an account that indicates the inflows and outflows of cash and cash parallels. Money which is in hands and demand deposits with the banks while cash equivalents are extremely liquid funds the inflows of capital follow from sales and, etc. and the cash outflows follow from purchases and, etc. It is a process to define how well a company controls its cash position and generates cash to pay its operating expenses.

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The cash flow statement expresses the details of cash activities of the beginning and end of the accounting period; it explores the short term of cash planning. Cash flow statement Comprises introductory and concluding balance of cash and cash parallels. It is working as a pointer of developing working capital, but the changes in working capital are not arranging, it appears only change in cash position. The cash flow statement is also using for organizing cash budgeting.

The cash flow statement is categorizing into three main activities, first is operating that is signifying movements of money due to consistent business actions, second is investing that is meaning the movement of cash due to any investment, and the third is financing that is signifying the funds raising accounts. It is a portion of a financial statement of a business. The cash flow statement contains four financial statements that are easy for every investor to looks at and to understand the financial position of a company.

What is the Fund Flow Statement?

The fund flow statement is a statement that is presenting the ups and downs of the monetary position of a business; it is an account that is showing variations in the fiscal condition of the entity in several accounting years. The fund flow statement also expresses the causes for the changes in the business situation of the preceding year and the present accounting year. It is long term and sometimes medium-term investigation of financial planning; it does not comprise an introductory balance of cash and cash parallels.

Fund flow statement studies about the changes, and also explain the reason in the working capital of the business. It also compares the two balance sheets by analyzing the sources of funds and the application of funds and its reasons for any differences. A fund flow statement displays the financial status of an organization. It helps the company to see through where the money is spending and from where they are receiving the payment.

The fund flow statement observes the productivity of the business in functioning the working capital, and it is ending with either the rise of working capital or reduction of working capital. Funds flow statement examination is founding on accumulation concept, and It is using for preparing capital budgeting. Fund flow statement is not a portion of the financial statement. The fund flow statement shows the causes and requests of funds. Fund flow statement is preparing to see the sources and uses of funds during a particular period and how its change brings affects the working capital of the company.

Key Differences

  1. The cash flow statement shows the changes in cash and bank, whereas it shows variations in the financial year.
  2. The cash flow statement studies the cash-generating efficiency, and On the other hand, the fund flow statement considers the firm’s productivity.
  3. Cash flow statement is a part of the financial report; conversely, fund flow statement is not a part of the financial statement
  4. Cash flow statement is useful for short term fiscal planning; on the flip side, the fund flow statement is helpful for long term economic planning.
  5. The cash flow statement contains the opening and closing balance of cash, whereas the fund flow statement does not provide an aperture and closing balance of the money.
  6. The cash flow statement is using the cash source of accounting. On the other hand, the fund flow statement is using the enlargement Source of accounting.
  7. The cash flow statement is using for cash budgeting; on the flip side, the fund flow statement is using for capital budgeting.

Conclusion

If we conclude the cash flow statement to fund flow statement, we find both are essential for the nourishment of the firm. The monetary situation of any business or corporation better understand with the help of a cash flow statement and fund flow statement, these two statements assist investors in knowing the bases and presentation of cash or funds. The cash flow statement is more dominant and using investors. But if we look at individually, we find both of them are serving a meaningful purpose.