Hello, financial wizards and newcomers to the accounting universe! Grab your ledger and put on your dancing shoes because today we’re making your cash flow like a pro on Dancing with the Stars! Welcome to the fabulous world of the Funds Flow Statement — a showstopper to understand where your money is actually coming from and where it’s dazzling away to like it owns the place.
🎬 Act 1: What is the Funds Flow Statement?
Imagine your finances were contestants in a game show. Some are winning big, some are flopping, and others are just there for the drama. The Funds Flow Statement tells you who’s playing what role. It breaks down the sources (where the money struts in) and applications (where the money prances out).
🕺 Act 2: The Source and Application Duel
Picture a traditional Old Western duel but replace cowboys with dollar bills. The battle between sources and applications will determine if your bank account survives or meets its untimely end, cowboy-style.
💡 Quick Formulae Alert!
Here’s a quick prep course in Funds Flow Math 101:
- Sources of Funds = Funds from Operations + Sale of Non-Current Assets + Issue of Share Capital + Long-term Borrowings
- Application of Funds = Purchase of Non-Current Assets + Payment of Long-term Borrowings + Payment of Dividends
📊 Let’s Diagram This Drama, Shall We?
flowchart TB
A[Funds from Operations] --> S[Sources of Funds]
B[Sale of Non-Current Assets] --> S
C[Issue of Share Capital] --> S
D[Long-term Borrowings] --> S
E[Purchase of Non-Current Assets] --> A[Application of Funds]
F[Payment of Long-term Borrowings] --> A
G[Payment of Dividends] --> A
E -.-> |Battle for Supremacy| F
E -.-> |Takes Down*| E
F --> S --> A
*Thinks it did! (Never underestimate the power of dividends, folks.)
🌟 Act 3: The Hands-on Helper - Your Very Own Funds Flow Statement
Here’s a ready structure you can casually name The Fantastic Funds Flow Statement™
Fantabulous Cash Company
| Sources of Funds | **Amount ($) ** |
|---|---|
| Funds from Operations | 8,000 |
| Sale of Non-Current Assets | 5,000 |
| Issue of Share Capital | 10,000 |
| Long-term Borrowings | 7,000 |
| Application of Funds | Amount ($) |
| Purchase of Non-Current Assets | 6,000 |
| Payment of Long-term Borrowings | 3,000 |
| Payment of Dividends | 4,000 |
📚 DIY or Dance Instruction- Quiz Time!
Let’s waltz you through some fun and informative quizzes to hone those accounting skills!
💃Ready, Quiz, GO!
-
What are two main components of a Funds Flow Statement?
- A) Revenue and Expenses
- B) Assets and Liabilities
- C) Sources and Applications
- D) Cash and Bank Balance
- Correct Answer: C
- Explanation: The main components of a Funds Flow Statement are sources and applications of funds.
-
Which of these is NOT typically a source of funds?
- A) Issue of Share Capital
- B) Sale of Non-Current Assets
- C) Purchase of Non-Current Assets
- D) Long-term Borrowings
- Correct Answer: C
- Explanation: Purchase of non-current assets is an application, not a source.
-
The Sale of Non-Current Assets should be recorded under which section?
- A) Income
- B) Sources
- C) Applications
- D) Liabilities
- Correct Answer: B
- Explanation: Sale of non-current assets is a source of funds.
-
In the duel of sources and applications, who will make sure they are depicted fairly?
- A) Sheriff Accountant
- B) Funds Flow Statement
- C) Cash Register
- D) Revenue
- Correct Answer: B
- Explanation: The Funds Flow Statement depicts both sources and applications fairly.
-
Long-term Borrowings are recorded under?
- A) Short-term Liabilities
- B) Applications
- C) Sources
- D) Operational Expenses
- Correct Answer: C
- Explanation: Long-term borrowings count as a source of funds.
-
Dividend Payments are categorized as?
- A) Operational Income
- B) Investments
- C) Sources of Funds
- D) Applications of Funds
- Correct Answer: D
- Explanation: Payments including dividends are considered applications of funds.
-
Frodo Baggins sold Bag-End for a substantial sum. Where would this amazing feat be listed?
- A) Mutual Funds list
- B) Applications of Funds
- C) Sources of Fun
- D) Savings Account for Hobbit Holidays
- Correct Answer: C
- Explanation: Sale of property like Bag-End is considered a source of funds.
-
Why should accountants love the Funds Flow Statement?
- A) It’s the epitome of financial drama.
- B) Ensures their money knows how to tango.
- C) Both A & B.
- D) None of the above.
- Correct Answer: C
- Explanation: Accountants should love the funds flow statement for its detailed depiction of financial movements and a dash of financial drama.
There you have it! You’re now equipped to tango with any funds flow! Keep dancing in the financial limelight!
With unbounded joy, Penny Wisecrack
