Learning Materials For Accounting, Management , Finance And Economics.

Sunday, April 11, 2010

Difference between Income Statement And Funds Flow Statement

Income statement and funds flow statement can be distinguished as below:

1. Meaning

Income Statement: Income statement is a summary of total income and total expenses and losses of a particular period.
Funds Flow Statement: Funds flow statement is the statement of changes in financial position.

2. Objective

Income Statement: Income statement is prepared to ascertain the profit earn or loss suffered by a firm.
Funds Flow Statement: Funds Flow Statement is prepared to identify how the profit has been utilized

3. Preparation

Income Statement: Income statement is prepared on the basis of nominal accounts.
Funds Flow Statement: Funds flow statement is prepared on the basis of balance sheet.

4. Measurement

Income Statement: Income statement is helpful in measuring the profitability of a firm.
Funds Flow Statement: Funds flow statement is helpful in determining the net changes in working capital.