Internal sources of funds, Cost Accounting

While we are looking for sources funds it is other than natural to start searching from home. What do we have? During examining the requirement for working capital we could also make an assessment like to whether the existing working capital is adequate or not. Hence, the first internal source is any surplus working capital that we may be having.

If we have any non-current assets that do not have any utilize they could be disposed off, thereby generating additional working capital. Please notice that it is not a regular and continuing source of funds.

We have seen previous that every profitable sale brings along with it funds in excess of what was expended upon the goods sold. Conversely, profits generated through the business contribute in the directions of additional working capital. However you may also notice that whenever we  measure  profits,  we  competition  the  revenue  against  all  expenses  concerning  to  the revenue, whether this involves use of funds in the current period or not. Hence the profits measured do not reflect the real amount of funds available so as to assess the actual funds generated from current operations we should add back to the profits: all those items of expenses not including utilize of funds during the current period. One main example of that an item is depreciation.

Hence we could summaries the important possible sources of funds, given below as:

 1. Funds generated by operations. It is, profit plus depreciation and other amortizations.

2. Sale of non-current assets

3. Any surplus working capital. Did you guess properly?

Posted Date: 4/9/2013 1:38:37 AM | Location : United States







Related Discussions:- Internal sources of funds, Assignment Help, Ask Question on Internal sources of funds, Get Answer, Expert's Help, Internal sources of funds Discussions

Write discussion on Internal sources of funds
Your posts are moderated
Related Questions
Q. Issues to consider when making decisions? At activity level A it can be seen from diagram that sales revenue line intersects the total cost line specifying that this is the

Harriet Ltd is a trading company set up a number of years ago with 5,000 £1ordinary shares issued at par. In order to expand the production facilities it needs to raise a further £

Integrated Ledger System An integrated account ledger system, which has a number of features that may be viewed as preferable to the interlocking ledger system. In present dec

Cost - Terms Used in Cost Accounting It measures the economic sacrifice created to achieve an organizations aims. For a product, cost represents the monetary measurement of re

Me ole cock spaniel plc. makes 3 products, details as follows:   Apples (£)       Pears (£)         Cockneys (£)   Selling price        60               80

Balance Sheet Classi?cations and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . .

Principles of Marginal Costing The principles of marginal costing are as given: 1. Period fixed costs are similar, for any volume of sales and production provided suc

Methods of Allocating Service Costs Direct Method The service costs are merely allocated to the production department according to the usage of the services given. St

Labor Transactions (i) Wages Paid in cash (ii) Wages incurred like a) Direct labor or else b) Indirect labor  In the Financial Books  In

Two classes of stock authorized: $100 par preferred and $2 par common how do you record this transaction? May 18 Issues 30,000 additional shares of $2 common stock for $75 p