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STATEMENT SHOWING CHANGES IN FINANACIAL POSITION

INFLOWSOURCES OF FUNDS OUTFLOW- APPLICATION OF FUNDS

Requirements:

1.Balance

sheets of the current &previous years 2.Adjustments which are to be incorporated.

Classification

of' Assets & liabilities Preparation of schedules

of changes in working capital. to find increase/decrease in working capital 2.Adjusted profit &loss account. to find Funds from operationsorloss in operations 3. Ledger accounts.. to find i)Application of funds,ii)Sources of funds iii)Transfer of accounts

1.schedule

 LIABILITIES ASSETS 1.Current assets: 1.Current liabilities: Stock,debtors,B/R,short Creditors,bank term investments,cash. o/d,B/R, short term 2.Non-current assets: loans etc., Fixed assets,long term 2.Non-current liabilities: investments. Share capital,Reserves 3.Intangible assets: &surplus,Provision etc., Goodwill,Patents etc., 3.Long term liabilities 4.Fictious assets: P/L a/c,preliminary exp., Discount on shares etc.

PREPARE THE SCHEDULE WITH FOLLOWING RULE: INCREASE IN CURRENT ASSETS& DECREASE IN CURRENT LIABILITIES Increases the working capital DECREASE IN CURRENT ASSESTS& INCREASE IN CURRENT LIABILITIES Decreases the working capital

ASSETS A/C
To Opening balance By Bank-sale (S) To Bank-purchases (A) By Adj.P/L a/c-depreciation TOAdj.P/L a/c-profit onsale By Adj.P/L a/c-loss on sale ---------------

LIABILITIES A/C
To Bank-payment(A) To Closing balance

By Opening balance By Adj.P/L a/c-transfer(T) By Barrowings(S) ------------------------------BALANCE IN ACCOUNTS Would be sale or purchase or transfer

To To To To To To To To

DepreciationLoss on sale of fixed Goodwill written off Preliminary expenses General reserve Dividend paid Provision for taxation BALANCE c/f -----------------

fixed asset a/c asset

By BALANCE b/d By Profit on sale of fixed assets By Dividend,Interest re ceived etc. By Profit on redemption of shares &debentures By FUNDS FROM OPERATIONS **
-------------------------------

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**Balancing figure

CALCULATION OF CASH FROM OPERATIONS

ADJUSTMENTS TO CONVERT FROM ACCRUAL BASIS TO CASH BASIS

FUNDS FROM OPERATIONS-(Adj.P/L a/c )

Working capital changes providing cash Or not requiring cash DECREASE IN CURRENT ASSETS & INCREASE IN CURRENT LIABILITIES

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Working capital changes requiring cash or Not providing cash: INCREASE IN CURRENT ASSETS & DEREASE IN CURRENT LIABILITIES

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 SOURCES

APPLICATION

FUNDS FROM OPERATION ISSUE OF SHARES ISSUE OF DEBENTURES LONG TERM LOANS SALE OF FIXED ASSETS &OTHER INVESTMENTS NON TRADING RECEIPTS

DECREASE IN WORKING CAPITAL

PUCHASE OF FIXED ASSETS &INVESTMENTS REDEMPTION OF PREFERENCE SHARES &DEBENTURES REPAYMENT OF LONG TERM LOANS PAYMENT OF DIVIDENTS PAYMENT OF TAXES LOSS FROM OPERATIONS

INCREASE IN ORKINGCAPICAPITAL

If the sources exceeds application, it increases working capital And vice versa

DERIVATION OF CASH OPERATING PROFIT

DISPOSITION OF CASH OPERATING LOSS

ISSUE OF SHARES RENT,INTEREST &DIVIDEND RECEIVED DECREASE IN Current ASSET EXCEPT CASH INCREASE IN ANY Current LIABILITY Decrease in Cash balance

REDEPTION OF SAHRES &DEBENTURES CASH DIVIDEND PAID INCREASE IN Current ASSET EXCEPT CASH DECREASE IN ANY Current LIABILITY Increase in Cash balance

## difference in CASH BALNACE

INFLOW OF CASH Cash from operations Issue of shares &debentures Barrowing of L.T. Loans Sale of fixed assets &investments Non-trading receipts e.g. dividend,rent, etc.

DECREASE IN CASH BALANCE

OUTFLOW OF CASH Loss from operations Purchase of shares & debentures Repayment of LT loans Purchase of fixed assets &investments Payment of dividends & taxes INCREASE IN CASH BALANCE

INFLOW OF CASH
Cash from operations Issue of shares &debentures Long term loans &sale of fixed assets,investments Non trading receipts -------------------------------------

Outflow of cash
Loss from operations Redemption of shares & debentures Repayment of L.T. loans &purchase of fixed assets Payment dividend &taxes -------------------------------

INCREASE/ DECREASE IN CASH BALANCE

Instead of showing increase or decrease in cash balance the statement may start with Opening balance of cash & reach closing balance of cash through inflows &outflows