Method of accounting.

This query is : Resolved

CA PRAVIN (Querist)
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12 January 2011 While recognising sales or purchases, sales should be recognised as gross. i.e. it includes excise,vat,other duties and cess as per section 145 of Income Tax Act.

Many companies follows net system of accounting rather than gross.Which system is valid as per accounting standards, principles.

As an auditor how we deal with it.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 January 2011 As per Accounting standard the net sales accounting systems is correct,

Sec,145 only for the Income tax calculation purpose we need to re calculate at the time of taxation