Difference between fund flow statement and balance sheet and income statement

Difference between Fund Flow Statement and Balance Sheet

The main differences between fund flow statement and balance sheet are as under.

Basis of differenceFund Flow StatementBalance Sheet
NatureFund flow statement is designed to show changes in financial position of an organization. Thus it is dynamic in nature.Balance sheet is to highlight financial discipline on a specific date and thus its nature is static.
ObjectThe main object is to show various sources and uses of sources of a specific period.Balance Sheet shows changes of Assets and Liabilities of a specific period.
InterestFund flow statement is useful to management for decision-making purposes.It is not used for decision making. It is used to study financial position of the organization.
FormatIt has no specific format. Fund flow statement cannot be prepared without scheduleĀ of change in working capital.Balance sheet is always prepared in a specific form.
Dependent on change in working capital.Fund flow statement cannot be prepared without Schedule of Change in Working Capital.Balance sheet does not need to go for schedule of change in working capital. It is dependent on Profit and Loss account.

Difference between fund flow statement and income statement

The following are the points of difference between fund flow statement and income statement.

Also Check:  Fund flow statement practical problems and solutions
Basis of differenceFund Flow StatementIncome Statement
ObjectThe main object to highlight the changes in financial position.The aim of income statement is to show profit and loss.
Means of sourcesIt shows various sources of funds from where the funds are received and spent.It shows various expenses and income. Expenses are more than income, thus net loss.
DependentsIt is dependent on income statement. It helps the preparations of fund flow statement.It cannot be prepared from the data of fund flow statement.
FormatFund flow statement is not prepared in a specified form. It may be in horizontal or vertical form.Income statement is prepared in a specified form. Trading, Profit & Loss Accounts with rules of double entry system of book keeping.
BenefitsIt is always for the benefit of top management.It is useful to shareholders or owners and Bankers.

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