Many people think that both fund flow statement and balance sheet are same however there are many differences between funds flow statement and balance sheet, let’s look at some of the differences between the two –
1. Fund Flow Statement is a statement which shows inflows and outflows of funds of the various items and their effect on the working Capital, while balance sheet is a schedule showing the balances of various accounts due to and due from the business at a particular date.
2. Fund Flow Statement can be prepared at any time while balance sheet is prepared at the end of accounting period only.
3. The objective behind preparing fund flow statement is to show change in various items of balance sheet between two balance sheet dates. But as far as balance sheet is concerned its objective is to show the financial position of the business at a particular date
4. While information contained in fund flow statement is used by internal management, but information contained in balance sheet is normally used by the outsiders.
5. While it is not necessary to publish the funds flow statement but publication of balance sheet is compulsory.