Difference between Cash Flow and Fund Flow Statements
Fund flow statement is basically prepared to know what caused changes in financial position between two accounting periods.It analyses what are the reasons for the changes. so the focus is what and why of changes whereas cash flow statement will ascertain what caused changes in cash and cash equivalents balances between two financial years.It also analyses the reasons for changes in cash and cash equivalent balances.
Second difference is fund flow statement will show from where long term funds are mobilized and where long term funds are utilised and whether entity has made any surplus or deficit. If it was surplus, then where that surplus was utilised and if it is deficit how that deficit was funded can be understood by having a look at fund flow statement .Where as cash flow statement will show from which activities cash was generated and which activity has consumed the cash NEXT. fund flow statement is an effective tool to identify whether there are any diversion of long term funds for short term purposes where As cash flow statement is an effective tool to understand from where a particular entity is generating cash and where this cash has been utilised.