09 October 2012
Welcome to all experts to join in discussion I have a case about a an Investment (private limited )company which maintaining books of account on mercantile basis.
But company records income on receipt basis from April to Feb and in the month of march a consolidate receivable from April to Feb is recorded and for month of march on receivable basis. my question is that is this practice of following cash basis accounting for 11 month and in March remaining receivable on consolidate basis i.e.(receivable less received) and for only month of march on pure receivable basis is Correct ???
Means following cash basis accounting for 11 months and Accrual basis accounting in month of march is correct or it will be treated as hybrid system. Is there any clarification from ICAI or Department for following accrual basis accounting through out the year?
09 October 2012
You Need to Follow Accrual System Throughout the Year, or Cash basis Throughout. But The Ultimate Effect is NIL.Since All Adjusting in March The YoY Effect Will be NIL.
09 October 2012
No This System is Not Correct .. Need to Change the Entries..Not Allowed, I mean to say is effect is YoY Basis is NIL, But Not Said System is Correct.
10 October 2012
Ultimate effect of YOY will be NIL, but companies have to follow mercantile system of a/cing as per company act, so its a clear cut violation of co. act. co. have to follow mercantile system in full year.
11 October 2012
****Welcome to all experts to join in discussion ****
I have a case about a an Investment (private limited )company which maintaining books of account on mercantile basis.
But company records income on receipt basis from April to Feb and in the month of march a consolidate receivable from April to Feb is recorded and for month of march on receivable basis. my question is that is this practice of following cash basis accounting for 11 month and in March remaining receivable on consolidate basis i.e.(receivable less received) and for only month of march on pure receivable basis is Correct ???
Means following cash basis accounting for 11 months and Accrual basis accounting in month of march is correct or it will be treated as hybrid system. Is there any clarification from ICAI or Department for following accrual basis accounting through out the year?
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