Exchange transitions involve change in non-current accounts i.e., non-current asset, non-current liability and owner(s) equity accounts. These transitions do not affect working capital but may have an important entity. In this way, the transitions may result in significant financing and investing activities.

Disclosure: If the statement of changes in financial position were to report only those transitions which directly affect working capita. then acquisition of building for debentures would be omitted from the SCFP. Moreover since the acquisition would have no effect o revenue or expenses except for the depreciation portion in the year of exchange, it would not properly be reported on the income statesman. Instead of ignoring an exchange transition of this type in analyzing the flow of working capital it should be viewed as if it were made for cash. In this way it would appear both as a source of working capital and a use of working capital. In other words such transitions should be reported as offsetting sources and uses of funds that is contra items.

The statement is more informative and of the purpose of the statement of changes in financial position it shows more completely the flow of company financial resources. The conversion of term loans into equity and issue of shares against acquisition of fixed assets are other examples of exchange transitions affecting or involving only non-current accounts. In the statement of changes in financial position such transitions should be shown as both a source and use of working capital while preparing the SCFP on working capital basis.

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