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Statement of sources and application of fund also knows as Funds Statement reflects the changes in net working capital during the period under review. All activities which result in increase in current liabilities and decrease in current assets are referred to as Sources of Funds and all activities which result in decrease in liabilities or increase in current asses are termed Application of Funds.
Funds Statement is the old form of Cash Flow statement. The difference is that in Funds Flow Statement changes in net working capital were reported whereas in cash flow statement changes in cash and cash equivalents is reported.
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