Funds Statement Practices in the United States and Canada.

Abstract The article focuses on fund statement practices in the context of the U.S. and Canada. Textbooks almost unanimously have adopted the concept of funds as synonymous with working capital. The funds concept has been variously conceived as encompassing cash, marketable securities, quick assets, net free cash, current assets, net working capital, or all balance sheet changes. The funds statement is the only major accounting report that is not predicated on the income approach. Conventions of permanence of the accounting entity, or of a static monetary measurement device do little harm to its basic framework. The funds statement is predicated on the funds basis with income considerations essentially alien to it. The funds basis is concerned with the availability and use of current purchasing potential by the company. Differences of opinion as to what best represents this current purchasing power have led to the use of various concepts of funds. Differences in objectives have been partially responsible for the extensive use of alternative concepts, since the funds concept used must be consistent with the objectives of reporting.