Difference between Cash flow and Fund flow
Cash Flow statement shows the changes in the cash position (Inflows and outflows) of a firm. It is an analytical reconciliation statement which explains the reasons for the differences between the opening and closing cash balances over a period. On the other hand, Fund Flow statement is a statement that shows the ups and downs of the financial position or the changes in working capital of the entity between the two financial years.
The financial position of any company can be better understood with the help of a cash flow statement and fund flow statement, along with the Balance Sheet and Income statement. These two statements helps stakeholders to know the sources and application of cash or funds.
|CASH FLOW||FUND FLOW|
|Meaning||A cash flow statement is a statement showing the inflows and outflows of cash and cash equivalents over a period.||A fund flow statement is a statement showing the changes in the financial position of the entity in different accounting years.|
|Purpose of Preparation||To show the reasons for movements in the cash at the beginning and at the end of the accounting period.||To show the reasons for the changes in the financial position, with respect to previous year and current accounting year.|
|Basis||Cash Basis of Accounting.||Accrual Basis of Accounting.|
|Analysis||Short Term Analysis of cash planning.||Long Term Analysis of financial planning|
|Discloses||Inflows and Outflows of Cash||Sources and applications of funds|
|Opening and closing balance||Contains opening and closing balance of cash and cash equivalents.||Does not contains opening balance of cash and cash equivalents.|
|Part of Financial Statement||Yes||No|