Clarifying funds statements - the two entity test

Jill L. McKinnon*, Carrick A. Martin, Graham H. Partington

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


A major shortcoming of the funds statement prepared under a resources concept is that the meaning of the term “resources” is unclear. A transaction test is usually adopted to identify entries involving funds, but it is apparent from published reports and from the Australian profession's recent exposure draft that substantial confusion remains. One response has been to reject the broader concepts in favour of narrower definitions such as cash or working capital. In this article, however, it is argued that an all resources funds statement, properly defined, has an important contribution to make. A “two entity” test is proposed which is claimed to be tighter and closer to the spirit of the original resources concept than the present transaction test.

Original languageEnglish
Pages (from-to)79-87
Number of pages9
JournalAccounting & Finance
Issue number1
Publication statusPublished - 1983


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