Post on 06-Apr-2018
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IntroductionIntroduction
FundsFunds FlowFlow StatementStatement oror StatementStatement ofof
ChangesChanges inin FinancialFinancial PositionPosition oror aa
StatementStatement ofof SourcesSources andand UsesUses ofof FundFundshowsshows forfor aa particularparticular periodperiod ofof timetime thethe
sourcessources fromfrom whichwhich fundsfunds werewere obtainedobtained
byby anan MFIMFI andand thethe specificspecific usesuses toto whichwhich
suchsuch fundsfunds werewere appliedapplied..
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IntroductionIntroduction--Contd.Contd.
It reports: the movement of funds betweenIt reports: the movement of funds between
various assets and liabilities during anvarious assets and liabilities during an
accounting period.accounting period.The following information are required toThe following information are required to
prepare a Funds Flow Statement:prepare a Funds Flow Statement:
Balance Sheets of the Current Year andBalance Sheets of the Current Year and
preceding Accounting Year,preceding Accounting Year,
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Required InformationRequired Information--Contd.Contd.
Profit and Loss Account of the currentProfit and Loss Account of the current
Accounting Year andAccounting Year and
Related Notes on Accounts, SchedulesRelated Notes on Accounts, Schedulesand Appendices.and Appendices.
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ObjectivesObjectives
To show the sources of financial resourcesTo show the sources of financial resources
To show the uses of financial resources,To show the uses of financial resources,
To provide information on all financing andTo provide information on all financing andinvestment activities of an MFI,investment activities of an MFI,
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Balance SheetBalance Sheet
TheThe balancebalance sheetsheet providesprovides aa listinglisting ofof allall
thethe assets,assets, liabilitiesliabilities andand capitalcapital ofof anan MFIMFI
atat aa givengiven pointpoint inin timetime..
AsAs such,such, itit isis aa snapshotsnapshot ofof thethe sourcessources
ofof fundsfunds (liabilities(liabilities andand capital)capital) andand howhow
thesethese fundsfunds havehave beenbeen appliedapplied (as(as
assets)assets)..
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This can be illustrated as belowThis can be illustrated as below
The design of the balance sheet is basedThe design of the balance sheet is based
on the accounting equation that states:on the accounting equation that states:
Liabilities and capital = AssetsLiabilities and capital = Assets
Liabilities &CapitalLiabilities &Capital AssetsAssets
SHARES
SURPLUSDEPOSITS
SAVINGS
CASH
LOANSINVESTMENTS
FIXED ASSETS
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Liabilities & CapitalLiabilities & Capital
TheThe LiabilityLiability andand capitalcapital sideside of of thethe
balancebalance sheetsheet usuallyusually comprisescomprises threethree
categoriescategories ofof itemsitems::
Member capital (or equity ):Member capital (or equity ):
Long term Liabilities:Long term Liabilities:
Current Liabilities:Current Liabilities:
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AssetsAssets
TheThe LiabilityLiability andand capitalcapital sideside of of thethebalancebalance sheetsheet usuallyusually comprisescomprises threethreecategoriescategories ofof itemsitems::
Cash:Cash:
Investments:Investments:
Loans:Loans:
Fixed Assets:Fixed Assets:
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Sample Balance SheetSample Balance Sheet
Liabilities and CapitalLiabilities and Capital AssetsAssets
MembersMembers SharesShares 4545,,300300 CashCash 402402
MembersMembers SavingsSavings 474474,,925925 BankBank 3838,,579579
LoanLoan fromfrom SRFSRF 284284,,500500 InvestmentsInvestments 88,,900900
GeneralGeneral ReservesReserves 5858,,238238 LoansLoans 895895,,278278
OtherOther ReservesReserves 9494,,200200 FixedFixed AssetsAssets 1414,,668668
CurrentCurrent LiabilitiesLiabilities 4848,,862862 InterestInterest ReceivableReceivable 4848,,198198
CapitalCapital andand LiabilitiesLiabilities 11,,006006,,025025 TotalTotalAssetsAssets 11,,006006,,025025
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Cash Flow SummaryCash Flow Summary
ThisThis statementstatement isis aa simplesimple summarysummary ofof cashcash inflowsinflows andand
outflowsoutflows overover aa givengiven periodperiod ofof timetime..
CashCash flowflow isis preparedprepared onon aa monthlymonthly basisbasis inin savingssavings andand
creditcredit cooperativescooperatives..
CashCash inflowinflow consistsconsists ofof savings,savings, deposits,deposits, shares,shares, loanloan
repayments,repayments, serviceservice fees,fees, interestinterest received,received, finesfines etcetc..
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Contd
CashCash outflowoutflow consistsconsists of of sharesshares
withdrawn,withdrawn, savingssavings withdrawn,withdrawn, depositsdeposits
withdrawn,withdrawn, loansloans issued,issued, equipmentequipment
purchased,purchased, expensesexpenses paidpaid etcetc..
CashCash flowflow isis thethe differencedifference betweenbetween thethe
cashcash flowingflowing inin andand thethe cashcash flowingflowing outout ofof
thethe CooperativeCooperative..
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A sample Cash Flow SummaryA sample Cash Flow Summary
ReceiptsReceipts DisbursementsDisbursements
OpeningOpening 20002000
SharesShares purchased purchased 700700 SharesShares withdrawnwithdrawn 300300
MembersMembers SavingsSavings 80008000 SavingsSavings withdrawnwithdrawn 15001500
MembersMembers DepositsDeposits 50005000 DepositsDeposits withdrawnwithdrawn 25002500
LoansLoans repaymentrepayment 75007500 LoansLoans GrantedGranted 1100011000
InterestInterest receivedreceived 18001800 EquipmentEquipment BoughtBought 30003000
FinesFines receivedreceived 300300 ExpensesExpenses PaidPaid 34003400
ClosingClosing CashCash BalanceBalance 36003600
TotalTotal CashCash availableavailable 2530025300 TotalTotal accountedaccounted 2530025300
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The Income and Expenditure StatementThe Income and Expenditure Statement
TheThe incomeincome andand expenditureexpenditure statementstatement isisaa summarysummary ofof thethe incomeincome andand expensesexpenses ofofthethe cooperativecooperative forfor aa periodperiod ofof timetime..
ThisThis isis alsoalso calledcalled asas profitprofit andand losslossstatementstatement.. UsuallyUsually thisthis isis preparedprepared
monthlymonthly or or annuallyannually.. TheThe accountingaccountingequationequation cancan bebe expandedexpanded toto includeinclude thethecomponentscomponents ofof incomeincome andand expensesexpenses..
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ContdContd
The accounting equation can be expanded toThe accounting equation can be expanded to
include the components of income andinclude the components of income and
expenses.expenses.
Assets = Liabilities + Capital + IncomeAssets = Liabilities + Capital + Income ExpensesExpenses
TheThe incomeincome andand expensesexpenses statementstatement listslists allall thethe
expensesexpenses incurredincurred byby thethe cooperativecooperative duringduring thethe givengiven
periodperiod ofof timetime andand allall thethe incomeincome earnedearned.. TheThe statementstatementalsoalso showsshows thethe excessexcess ofof incomeincome overover expenditureexpenditure whichwhich
isis calledcalled asas surplussurplus oror profitprofit..
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The income and expenditure can beThe income and expenditure can be
grouped under the following heads:grouped under the following heads:
Income:Income: Expenses:Expenses:
--InterestInterest onon LoansLoans --CostCost ofof fundsfunds
--serviceservice feefee --personnelpersonnel costscosts
--membershipmembership feesfees --facilityfacility costscosts
--interestinterest onon investmentsinvestments --operationaloperational costscosts
--OtherOther incomeincome
--governinggoverning costscosts
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