What is Fund Statement? Explain its purposes, sources of fund application of fund etc.?

Question

What is Fund Statement? Explain its purposes, sources of fund application of fund etc.

Answer 1

Companies used to prepare a Funds Statement before it was replaced by the Cash Flow Statement. This statement shows how the change in cash or working capital was achieved from changes in various items of the balance sheet,  but, it does that in a less informative manner because there is no distinction of purpose.

The net change of every balance sheet item between two consecutive years is classified as either a source or a use of funds:

- sources of funds:

- results from operations

- decrease in asset

- increase in liability or equity

- uses of funds:

- increase in asset

- decrease in liability or equity

- payment of dividends