Funds flow statement is prepared mainly with the help of balance sheets of any two successive dates. Funds flow statement is prepared by comparing the balance sheets of the two dates and using the income statement of the year for which the funds flow statement is being prepared.The following steps are taken for the preparation of the funds flow statement.
Step -1:
Preparation of statement or schedule of changes in Net Working Capital
.
*Using only one current account
*Using both current and non-current accounts
Step -2
Statement of funds from operation
* Add Back Method
* Profit and loss Adjustment Account Method
Step -3
Funds Flow Statement