Page 95 - Corporate Finance PDF Final new link

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BRILLIANT’S Cash Flow Statement 95

2. Concept It is based on a wider concept of It is based on a narrower concept of
funds, i.e. working capital. funds, i.e. cash.
3. Concerned with Funds flow statement is concern- Cash flow statement is concerned
ed with changes in working capital with changes in cash position.
position between two balance sheet
dates.
4. Basis of Account- It is based on accrual basis of acco- It is based on cash basis of accoun-
ing unting. ting.
5. Schedule of chan- Schedule of changes in working No such schedule of changes in
ges in working capital is prepared to show the working capital is prepared.
capital changes in current assets and
current liabilities.
6. Method of Prepa- Sources and applications of funds All cash inflows and outflows are
ration are revealed by this statement. classified in terms of operating,
The difference between sources and investing and financing activities.
applications of funds represents The net difference represents the
net increase or decrease in working net increase or decrease in cash
capital. and cash equivalents.
7. Base for analysis The analysis is based on changes The analysis is based on changes in
occurred in working capital during cash position.
the year.
8. Utility It is useful for long-term planning It is more useful for short-term
and financing. analysis and cash planning of the
business.
9. Amendment No amendments can be made in The proforma and other rules of
the rules and proforma of funds cash flow statement can be amended
flow statement. and presented in the form of Accoun-
ting Standard-3 (Revised).

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