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Cost & management Accounting
- 2. Meaning of Fund flow statement The fund flow statement is a report on the movement of funds or working capital. It explains how working capital is raised and used during an accounting period Objective of Fund flow statement To show how the resources have been obtained & used To indicate the results of current financial management To show how the general expansion of the business has been Financed To indicate the relationship between profit from operations ,distribution of dividend & raising of new capital To have an assessment of the working capital position of the concern 2 Ms.Jissy.C,Assistant Professor.
- 3. Preparation of Fund flow Statement 3 Ms.Jissy.C,Assistant Professor.
- 5. Steps in fund flow statement Changes in working capital Fund from operations with adjusted P&l Fund flow statement Schedule changes in working capital WC=CA-CL Rules CA Increase =WC Increase CA Decrease = WC Decrease CL Increase= WC Decrease CL Decrease= WC Increase WC Increase=Changes in WC Decrease 5 Ms.Jissy.C,Assistant Professor.
- 7. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset: Cash 3000 4700 1700 - Total( B) 7000 4500 Accounts receivable 12000 11500 - 500 Stock 8000 9000 1000 - Total (a) 23000 25200 Current liabities:Account payable 7000 4500 2500 Working Capital(a-b) 16000 20700 Increase in WC 4700 4700 Total 20700 20700 5200 5200 31 DECEMBER Changes in WC 7 Ms.Jissy.C,Assistant Professor.
- 9. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset: Stock 40000 60000 20000 - Advances 10000 40000 30000 - Debtors 20000 40000 20000 Bills Receivable 5000 2000 - 3000 Prepaid Exp 5000 18000 13000 - Cash 20000 10000 - 10000 Total 100000 170000 31 DECEMBER Changes in WC 9 Ms.Jissy.C,Assistant Professor.
- 10. Current Liabilities: 2009 2010 incrs decrs Creditors 20000 10000 10000 Bills Payable 2000 - 2000 Over draft 3000 - 3000 - Taxation Provision 7000 12000 5000 Proposed Dividend 10000 16000 - 6000 Total 40000 40000 96000 26000 31 DECEMBER Changes in WC Working Capital (A-B) 60000 130000 Net Increase In WC 70000 70000 Total 130000 130000 96000 96000 10 Ms.Jissy.C,Assistant Professor.
- 14. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset: Cash 110000 170000 60000 - Total( B) 100000 70000 Debtors 160000 150000 - 10000 Stock 85000 105000 20000 - Total (a) 355000 425000 Current liabities: sundry crs 100000 70000 30000 Working Capital(a-b) 255000 355000 Increase in WC 100000 100000 Total 355000 355000 110000 110000 31 DECEMBER Changes in WC 14 Ms.Jissy.C,Assistant Professor.
- 15. Statement of source and Applications of Funds Sources Rs Applications Rs Issue of Share Capital 100000 Plant & Machinery 60000-50000) 10000 Fund from Opreations (30000-15000) 15000 Furniture % fixtures 15000-10000 5000 Net increase in WC 100000 115000 115000 15 Ms.Jissy.C,Assistant Professor.
- 18. Working Notes Fixed Assets To Balance b/d 190000 Particulars RS Particulars Rs By( Depreciation)Adjusted p/l 15000 By Balance c/d 210000 To Cash(Purchase) 35000 225000 225000 18 Ms.Jissy.C,Assistant Professor.
- 19. Working Note: Share capital Particulars RS Particulars Rs By( Balance b/d 300000 40000 40000 By Cash 50000 By General Reserve 50000 By Balance C/d 40000 19 Ms.Jissy.C,Assistant Professor.
- 20. Working Note: Adjusted P& L Particulars RS Particulars Rs By( Balance b/d 30000 75000 75000 To Fixed Assets 15000 By Balance C/d 60000 By Fund From Operations(b/f) 45000 20 Ms.Jissy.C,Assistant Professor.
- 21. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset: Cash 30000 90000 60000 - Total( B) 45000 135000 Accounts Receivable 105000 150000 45000 - Inventories 150000 195000 45000 - Total (a) 285000 435000 Current liabilities: Account Payable 45000 135000 90000 Working Capital(a-b) 240000 300000 Increase in WC 60000 60000 Total 300000 300000 150000 150000 31 DECEMBER Changes in WC 21 Ms.Jissy.C,Assistant Professor.
- 22. Fund Flow Statement for the year ended 31.12.2010 Sources RS Application Rs Issue of share 50000(wn) 95000 95000 Fund from Operations 45000(wn) Purchase of Fixed Asset 35000(wn) Incrse in Working Capital 60000 22 Ms.Jissy.C,Assistant Professor.
- 25. Working Note: Adjusted P& L Particulars RS Particulars Rs By( Balance b/d 14000 31000 31000 To Balnce C/d 31000 By Fund From Operations(b/f)* 17000 25 Ms.Jissy.C,Assistant Professor.
- 26. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset:Stock 121000 136000 15000 - Total( B) 106000 70000 Debtors 181000 170000 - 11000 Cash 143000 270000 127000 - Total (a) 445000 576000 Current liabilities: Sundry Crs 106000 70000 36000 - Working Capital(a-b) 339000 506000 Increase in WC 167000 167000 Total 506000 506000 178000 178000 31 DECEMBER Changes in WC 26 Ms.Jissy.C,Assistant Professor.
- 27. Fund Flow Statement for the year ended 31.12.2010 Sources RS Application Rs Issue of share 175000 192000 192000 Fund from Operations* 17000 Plant Purchase 25000 Incrse in Working Capital 167000 27 Ms.Jissy.C,Assistant Professor.
- 29. Working Notes Fixed Assets To Balance b/d 41000 Particulars RS Particulars Rs By Cash (Sales) 1000 By Balance c/d 40000 41000 41000 29 Ms.Jissy.C,Assistant Professor.
- 30. Working Notes Provision for depreciation by Balance b/d 11000 Particulars RS Particulars Rs To Balnce c/d 15000 Adjusted p/L 4000 15000 15000 30 Ms.Jissy.C,Assistant Professor.
- 31. Working Notes Adjusted P&L By Balance B/d 1000 Particulars RS Particulars Rs ToProvision for debentures 4000 To Balance C/d 1200 31 Ms.Jissy.C,Assistant Professor. Fund From Operations 4200 5200 5200
- 32. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset:Debtors 20000 24000 4000 - Total( B) 32500 27800 stock 30000 35000 5000 - Prepaid exp Cash 300 1200 500 3500 200 2300 - Total (a) 51500 63000 Current liabilities: Sundry Crs Provision for tax Proposed Dividend Bank OD 12000 3000 5000 12500 11000 4200 5800 6800 1000 5700 - 1200 800 Working Capital(a-b) 19000 35200 Increase in WC 16200 16200 Total 35200 35200 18200 18200 31 DECEMBER Changes in WC 32 Ms.Jissy.C,Assistant Professor.
- 33. Fund Flow Statement for the year ended 31.12.2010 Sources RS Application Rs Redeemable Prefence share 10000 Issue of debentures 1000 Sale of Fixed Asset 1000 Fund from Operations* 4200 33 Ms.Jissy.C,Assistant Professor. Incrse in Working Capital 16200 16200 16200
- 35. Working Notes Plant & Machniery To Balance b/d 60000 Particulars RS Particulars Rs By Depreciation 20000 Balnce C/d 50000 35 Ms.Jissy.C,Assistant Professor. To Cash (Purchase) b/f 10000 70000 70000
- 36. Working Notes Adjusted P&L By Balance B/d 34000 Particulars RS Particulars Rs To debentures 20000 To Goodwill 5000 36 Ms.Jissy.C,Assistant Professor. To Dividends 12000 To Balnce c/d 26000 63000 By Fund from Operations 29000 63000
- 37. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse Current Asset: 16000 19000 3000 - Current Liabilities 12000 3000 9000 Working Capital(a-b) 4000 16000 Increase in WC 12000 12000 Total 16000 16000 12000 12000 31 DECEMBER Changes in WC 37 Ms.Jissy.C,Assistant Professor.
- 38. Fund Flow Statement for the year ended 31.12.2010 Sources RS Application Rs Issue of Shares 5000 Purchase of P&M 10000 Payment of dividend 12000 Fund from Operations* 29000 38 Ms.Jissy.C,Assistant Professor. 34000 34000 Incrse in Working Capital 12000
- 40. Working Notes Plant & Machniery To Balance b/d 35600 Particulars RS Particulars Rs By Depreciation 12800 Balnce C/d 51300 40 Ms.Jissy.C,Assistant Professor. To Cash (Purchase) b/f 28500 64100 64100
- 41. Working Notes Furniture & fixture Account To Balance b/d 2400 Particulars RS Particulars Rs By Depreciation 400 Balnce C/d 500 41 Ms.Jissy.C,Assistant Professor. To Cash (Purchase) b/f 1500 2400 2400
- 42. Working Notes General Reserve To Balance b/d 6000 Particulars RS Particulars Rs Balnce C/d 9000 42 Ms.Jissy.C,Assistant Professor. To Adjusted p/l) b/f 3000 9000 9000
- 43. Working Notes Adjusted P&L By Balance B/d 19500 Particulars RS Particulars Rs To Plant & Machinery (dep) 12800 To Furniture Fixture(dep) 400 43 Ms.Jissy.C,Assistant Professor. To Genaral reserve 3000 To Balnce c/d 20800 37000 By Fund from Operations 17500 37000
- 44. Solution: Statement of Changes in Working Capital Particulars 2009 2010 1ncrse Decrse CurrentAsset:Stock 22100 26000 3900 - Total( B) 43300 47300 Debtors 36500 39100 2600 - Bank Balance 4800 4000 - 800 Total (a) 63400 69100 Current liabilities: Sundry Crs Income tax provision 33500 9800 36400 10900 - 2900 1100 Working Capital(a-b) 20100 21800 Increase in WC 1700 1700 Total 21800 21800 6500 6500 31 DECEMBER Changes in WC 44 Ms.Jissy.C,Assistant Professor.
- 45. Fund Flow Statement for the year ended 31.12.2010 Sources RS Application Rs Issue of share 40000 Share premium 4000 Issue of debentures 26000 Sale of furniture & Fix 500 45 Ms.Jissy.C,Assistant Professor. Fund From Operation 17500 Purchase of freehold premises 57800 Purchase of P& M 28500 Increase of WC 1700 88000 88000