| Basis of Difference |
Profit & Loss Account |
Funds Flow Statement |
| Objective |
Profit & Loss A/c is prepared to workout
net profit or net loss of the business. |
A funds flow statement is prepared in order
to show the overall inflow or outflow of working capital during
a period of time. |
| Contents |
Profit & Loss A/c is prepared on the basis
of nominal accounts. |
Funds flow statement is prepared on the basis
of non-current assets and liabilities. |
| Compulsion |
It is compulsory for a company to prepare its
Trading and Profit & Loss A/c at the end of its accounting
period. |
It is not compulsory for a company to prepare
funds flow statement. |
| Capacity |
Profit & Loss A/c is prepared in order
to show the performance of business activities. |
Funds flow statement helps in financial activities
of a business. |
| Tool of financial analysis |
Profit & Loss A/c is one of the basic financial
statements, which provides information for analysis of financial
statement. |
Funds flow statement is an important tool of
analysis of financial statement. |
Accounts
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