Cash Flow and Fund Flow Statements in Tally Prime

In this article, we will explore how to generate Cash Flow and Fund Flow Statements using Tally Prime. Both statements are essential for understanding a company’s liquidity, cash movements, and the financial position over a given period. We will explain the steps involved and provide a real-world example for better understanding.

Step 1: Opening Tally Prime

To begin, open the Tally Prime application. After launching the software, you will be presented with the main screen where you can manage your company’s financial data.

Step 2: Select Company

If you have already created a company in Tally Prime, select the company from the list of available companies. If a company does not exist yet, you will need to create one by entering details such as the company name, address, financial year, and other relevant information.

Step 3: Create Ledgers

Before generating Cash Flow and Fund Flow statements, ensure that all necessary ledgers are created in Tally Prime. Some key ledger groups include:

• Assets (Current and Fixed Assets)
• Liabilities (Short-term and Long-term Liabilities)
• Income and Expense Accounts
• Cash and Bank Accounts

For example, let's create the following ledgers:

• Cash in Hand (under Current Assets)
• Loan Payable (under Liabilities)
• Rent Expense (under Expenses)
• Sales (under Income)

Step 4: Enter Transactions

Now, record the financial transactions in Tally Prime. These transactions will include receipts, payments, purchases, sales, etc. Below are some sample transactions:

• Received a cash payment of ₹30,000 from a customer (Cash in Hand increases)
• Paid ₹10,000 for office rent (Cash decreases)
• Received a loan of ₹50,000 (Loan Payable increases)
• Made a payment of ₹5,000 towards loan principal (Cash decreases)

Step 5: Generate Cash Flow Statement

Once the transactions are recorded, generating a Cash Flow statement in Tally Prime is easy. Follow these steps:

1. Press Alt + F1 to go to the “Company Info” screen.
2. Navigate to the “Display” menu and select “Cash Flow” under the “Financial Statements” section.
3. Select the date range for which you want the Cash Flow statement (for example, 01st January 2024 to 31st December 2024).
4. Click on “Show” to generate the Cash Flow statement.

The Cash Flow statement will show the following sections:

• Operating Activities: This section includes cash received from customers and cash payments for operating expenses.
• Investing Activities: This includes cash flows related to the purchase or sale of long-term assets like property and equipment.
• Financing Activities: This includes cash flows related to loans, capital, and dividend payments.

Step 6: Generate Fund Flow Statement

After generating the Cash Flow statement, you can proceed to generate the Fund Flow statement. The Fund Flow statement tracks the movement of funds within the business and highlights changes in the working capital.

1. Go to the “Display” menu and select “Fund Flow” under the “Financial Statements” section.
2. Enter the date range (for example, 01st January 2024 to 31st December 2024).
3. Click on “Show” to generate the Fund Flow statement.

The Fund Flow statement typically includes the following sections:

• Sources of Funds: This shows funds raised from various sources like loans, equity, etc.
• Applications of Funds: This shows how the funds were used, for example, payments to creditors or for purchasing assets.

Step 7: Reviewing the Statements

Once the Cash Flow and Fund Flow statements are generated, you can review the data. The statements will typically include values for cash inflows, cash outflows, and any significant changes in assets or liabilities. Below is a sample example of what these statements might look like:

Sample Cash Flow Statement

Sample Fund Flow Statement

Step 8: Closing the Statements

After reviewing both the Cash Flow and Fund Flow statements, you can print or export them in various formats (PDF, Excel, etc.). You can save the reports for future reference or use them for financial analysis and decision-making.

Conclusion

Generating Cash Flow and Fund Flow statements in Tally Prime is an essential process for analyzing the financial health and liquidity of a business. By following the steps outlined above, you can create accurate reports that provide valuable insights into your company's operations, financing activities, and overall financial position.