Difference Between Fund Flow Statement and Balance Sheet
The main differences between fund flow statements and balance sheets are summarized below.
|Type of Difference||Fund Flow Statement||Balance Sheet|
|Nature||Fund flow statements show changes in the financial position of an organization. Thus, they are dynamic in nature.||Balance sheets provide financial information on a specific date and, therefore, their nature is static.|
|Objective||To show various sources and the uses of those sources over a specific period.||To show changes in assets and liabilities for a specific period.|
|Interest||Fund flow statements are useful for managerial decision-making.||Balance sheets are used to study an organization’s financial position, not to assist decision-making.|
|Format||Fund flow statements have no specific format.||Balance sheets are always prepared according to a specific format.|
|Dependent on Change in Working Capital||Fund flow statements cannot be prepared without a schedule of change in working capital.||Balance sheets do not require a schedule of change in working capital. They are dependent on the profit and loss account.|
Difference Between Fund Flow Statement and Income Statement
The following are the major points of difference between fund flow statements and income statements.
|Type of difference||Fund Flow Statement||Income Statement|
|Objective||To highlight changes in financial position.||To show profit and loss.|
|Means of Sources||Fund flow statements show where funds are received and how they are spent.||Shows various expenses and types of income. When expenses exceed income, there is a net loss.|
|Dependencies||Dependent on an income statement.||Cannot be prepared using data from the fund flow statement.|
|Format||Fund flow statements have no specific format. They can have either a horizontal or vertical format.||Income statements are prepared according to a specified format. Trading and profit and loss accounts are maintained based on the rules of the double entry system of bookkeeping.|
|Benefits||Always used for the benefit of top management.||Useful to shareholders, owners, and bankers.|
We hope the information above satisfies your questions about the differences between fund flow statement, balance sheet, and income statement. Know more about the practical uses of these statements by reaching out to a financial advisor in Irvine, CA. To get a full list of the areas we cover, please visit our financial advisor page.