Operating cost is the cost that is associated with the administration and maintenance of the business on day-to-day basis. It includes various costs such as cost of direct materials, direct labour, overhead costs.etc.

Source of funds results in the generation of cash for the company. Sale of investments results in the generation of cash which is regarded as source of funds. 

Owner investment, also called owner's investment or contributed capital, is the amount of assets that the owner puts into the company. 

According to working capital concept, the term 'funds' refers to net working capital (current assets-current liabilities). In the funds statement, inflow and outflow of net working capital is displayed.

Capital expenditure is a money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.

Interest received in cash from loans and advances is recorded under investing activities. Interest paid on loans, debentures and advances is recorded under financing activities.

Interest paid and interest and dividends received are usually classified as operating cash flows for a financial enterprises. However, there is no consensus on the classification of these cash flows for other enterprises. It is more appropriate that interest paid and interest and dividends received are classified as financing cash flows and investing cash flows respectively, because they are cost of obtaining financial resources or returns on investments.

The fixed asset is bought as hire purchase is the cost of obtaining financial resources or returns on investments. Hence, interest element is classified under financing activities and loan element is classified under investing activities.

Investing activities related to purchase and sale of long-term and short-term assets or fixed assets such as machinery, furniture, land and building etc.

As per AS-3, financing activities are the activities that result in changes in the size and composition of the owners' capital and borrowings of the enterprises. Separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds to the enterprise.

A business reports net income under operating activities of cash flow statement. The company reports a loss from sale of a long-term business assets as part of its net income because it represents money spent that the business didn't recoup. The difference amount between loss and book value is reported under investing activities.

Companies may increase cash levels through financing and investing activities. 

As per AS-3, financing activities are activities are activities that result in change in the size and composition of the owners' capital and borrowings of the enterprises.

The owner's capital is the part of the accounting equation that represents the liquid cash that the company has earned, which it has on hand for daily operations as well as capital investments. When a business owner withdraws cash for personal use, these funds come out this capital account. Proprietor withdrawal cash or other asset from business recorded as credit to cash and a debit to the proprietor draws account i.e. cash in hand to decrease.  

Fund flow statement is a statement of cash inflows and cash outflows. There are persons who feel that the funds are cash or working capital which represent the excess of current assets over current liabilities. The term flow means movement and includes both inflows and outflows of resources.And the funds used in the flow statement is a current assets.

Working capital is current assets less current liabilities. A decrease in the net current assets leads to increase in fund flow which needs to be included. Hence, It appear in sources.

The main objective of preparing cash flow statement for a particular accounting period is to present information regarding inflow and outflow of cash, cash and cash equivalent generated , used, and net changes in cash flows.

Besides,

It presents the investment and financial activities of a concern for a particular period. It also fulfills the following objectives;

• Ensuring future positive cash flow of particular concern.
• Ensuring capacity of an organization to pay a dividend.
• Identifying non-cash items ensuring cash income and expenses of a concern.
• Comparing various items of the current year with those of last year.