Question { Chartered Accountant, 6569 }

what is the main defference between cash flow and funds flow

Answer

A Cash flow statement is concerned only with the change of cash position while a funds flow analysis is concerned with change in working capital position between two balance sheet dates.

A Cash flow statement is merely a record of cash reciepts and disbursements.
While studying the short-term solvency of a business one is interested not only in cash balance but also in the assets which are easily convertible in to cash.