28 April 2008
Mr. A follows cash basis of accouting. He issued 2 cheques on 31.03.2008. One is cleared on 02.04.2008 and another on 26.04.2008...(after 26 days from year end).
Whether these cheques issued can be treated as expenses? Is it necessary that payment should be reflected in bank statements to claim it as expense in case of cash basis?
29 April 2008
certainly these are expenses if they otherwise qualify to be so. when I am drawing some cheque for paying some expense I am debiting the concerned expense A/c and crediting bank.. now if the cheque is cleared afterwards, it will get reflected in the bank reco. but this are expenses of the concerned period and obviously have been "paid". it does not matter whether the cheque is "cleared" or not
29 April 2008
WE NEED TO TREAT BOTH AMOUNTS AS EXP. IN 07-08 FIN. YEAR IRRESPECTIVE OF THE DATE OF CLEARING. THEY MAY NOT EVEN BE CLEARED IF PARTIES WONT PRESENT OR FAIL FOR ANY REASON TO PRESENT.EVEN THEN WE NEED TO TREAT BOTH EXP. AS EXP. IN 07-08. R.V.RAO
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