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

XYZ Co. manufactures automation machinery according to customer specifications.  The company is relatively new and has grown each year.  XYZ Co. operated at about 75% of practical

prepare a trading and profit and loss accounts for the period using marginal costing and absorption costing

using the high low method how do i calculate the costs that are expected when the output expected is out of the range given for example cost prdctn volume 110000

The Integrated Management Project is to be based on an organisation, a strategic business unit, or profit centre that has good potential for growth and development. The brief is to

King Airlines King Airlines is one of many low-cost airlines in Europe. The managers want to expand the business and have an opportunity to purchase a second-hand plane to op

The San Carlos Company is an electronics business with eight product lines. Income data for one of the products (XT-107) for June 2011 are as follows: Revenues, 200,000 units at av


Example of Flexible and Fixed Budget A company has budgeted to produce and sell 100,000 units of cakes throughout the next period. The selling price per cake is Sh. 20 and var

Smart Ltd ha sa unit selling price of $500 variable costs per unit of $325 and fixed costs of $140 000. Calculate the break even point in units using (a) a mathematical equations a