Following are Steps to Make Fund Flow

Step 1 Get Balance Sheet of atleast 2 years on Same Excel Sheet in Comparison format

Example

How to Make Fund Flow Statement? - Fund Flow Statement

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Step 2 Finding Long Term and Short Term Items in  Balance Sheet

Items In Balance Sheet are of 2 types

Long Term

and

Short Term

 

What are Long Term Items?

All Items of Balance Sheet except Current Assets and Curent Liabilities are Long Term Items

 

What are Short Term Items?

Only Current Assets and Curent Liabilities are Short Term Items

 

Example

In above Balance Sheet,Figures Colored Red are Short Term Items and those in Black are Long Term Items

image 2.png

 


 

 

  Step 3 Find Long Term Sources, Long Term Uses and Long Term Surplus/Deficit

 

How to Determine Sources and Uses of Funds?

Case

Source/ Use

If Liability Increase

Source

If Liability Decrease

Use

If Assets Increase

Use

If Assets Decrease

Source

 

Suppose in our Balance Sheet

Following are Long Term Sources and Uses

  f1.png

Long Term Surplus (Deficit)

 Suppose Total Long Term Sources are 10000 and Total Long Term Uses are 7000,

Then Long Term Surplus=3000

 

Suppose Total Long Term Sources are 10000 and Total Long Term Uses are 11000,

Then Long Term Deficit=1000

In our example above:-Total Long Term Sources are 5000 and Total Long Term Uses are 6500,

Then Long Term Deficit=1500

 


Step 4 Similarly Find Short Term Sources, Short Term Uses and Short Term Surplus/Deficit

Same Rules are to be followed for Short Term

   

If Liability Increase

Source

If Liability Decrease

Use

If Assets Increase

Use

If Assets Decrease

Source

 

 

Example

 

  fundf.png

 

 

 

Note:-Some people take Total Current Assets and Current Liability to determine Short Term Sources and Used

 

Example

image 3.png  


Step 5 Check by Calculating Net Surplus

Net Surplus is the total of Long Term and Short Term Surplus/ Deficit

If Net Surplus is 0, It means we have prepared Fund Flow Correctly

 

Suppose there is Long Term Surplus of 400,there will be Short Term Deficit of (400)

Net Surplus=400+(400)=400-400=0

 

Suppose there is Long Term Deficit of (600),there will be Short Term Surplus of 600

Net Surplus=(600)+600=-600+600=0

 

If Net Surplus is not coming to 0,it means there is some mistake

Suppose in our Example, Net Surplus=0(-1500+1500) as shown below


fund flow last.png

This is our Final Fund Flow Statement

  1. Accounts and Finance
  2. Step 6 Fund Flow and Cash Flow

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .