18 November 2008
hello friendz.... can any one tell me the exact meaning cash base system of accounting? i think its meaning is when u actually paid expense then record it as expense similarly for income also. suppose i purchased materials worth rs 50000 on six month credit from supplier on 1.02.2008.now under cash system of accounting what entry i should pass on 01.02.08? as i have not paid i cant treat it as expense n if i dont pass any entry then as on 31.03.2008 my balance sheet will not gice true n fair view..... plz reply treat assessee as individual/firm etc. bcoz co.has to follow sec 209
18 November 2008
as an individual/firm assessee u can't pass the entry until the payment is made. as u said that in this way correct position might not be shown on 31/3. but becz of this default ,we follow accrual system. therefore, entry will not be passed whether it shows a wrong position.
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