External sources of funds, Cost Accounting

These sources of funds are resources increased from outside the organization to augment funds availability for any of the utilizations to be discussed later. Generally, there are only two manners of doing this:

1. Through contributing or raising additional capital, and

2. Through increased long-term borrowing.

Please notice that short-term creditors are not involved as a source of funds as we have previously defined funds as "current assets less current liabilities". Hence, working capital shows long-term investment in current assets and therefore short-term borrowing will not raise working capital.

The sources of funds, as generally presented in the fund flow statement, are enumerated as given:

Sources of Funds

                      Operations:                                                                            

                      Net Profit after taxes                                                                         

                      Add: Depreciation

                      Other amortisations

                      Funds provided by operations

New issue of share capital

New issue of debentures/bonds

         Additional long-term borrowing

         Sale proceeds of fixed assets

         Sale of long-term investment

Posted Date: 4/9/2013 1:41:42 AM | Location : United States







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