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Bank Balance Negative in Balance Sheet

Kumar Sushank (General Manager - Finance) (1040 Points)

29 November 2019

Bank Balance is showing as negative in Balance Sheet due to some entries. I want to know that can any issue arises in future for the same.

However, Auditors should checked the bank balance in statement, but they didn't check & signed this. Surprisingly he is saying that I thought this is belongs to OD A/C.

What should I in that case, is it small mistake?

If we are putting wrong figures in Balance Sheet, then what is the legal action can taken against directors or company.

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19 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 29 November 2019

Yes...
In Balance Sheet :
If OD/OCC A/c then it will be shown in Liability Side...

If it's current A/c then it will be shown in Asset side

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Kapadia Pravin (17259 Points)
Replied 29 November 2019

As you are writing it's for the reason of some entries , the balance has become negative.
It's not bcoz of OD or CC A/c.

In this case there is nothing to worry. This negative balance is bcoz of few entries in the Reconcilliation statement .

There is nothing illegal. Prepare and keep on record the Reconcilliation Statement on record.

show such negative balance under the head cash & bank balances only.

Further discuss with the auditor and get it (Reconcilliation) approved by the Auditor.

Kumar Sushank (General Manager - Finance) (1040 Points)
Replied 29 November 2019

Basically, I want to say that CA is trying to convince that he is not made any mistake. But according to me how can he assume that Bank was related to OD.

In Balance Sheet : Bank Current A/C means which comes under Current Assets, which can't be negative.

OD A/C can not comes under current assets it is loans liability.

My question about that is it big mistake or not, if wrong balance sheet made then what is the legal problems or fines (if any).

Kapadia Pravin (17259 Points)
Replied 29 November 2019

Is it having any substantial impact on P&L ?
Any tax impact ?

How much is difference between negative balance and Actual balance ?

How and why can't you locate those few entries ? Instead solely pointing at tax auditor.

Primary duty of tallying books of accounts is yours. You may ask your accountant to do the job.

This is a small issue which required no further stretching . This is an overnight job. That's all.

Good Luck !!!!

sabyasachi mukherjee (27574 Points)
Replied 29 November 2019

@ shawshank
check the receipts side..
Its imperative that you have missed certain dr. side. entry.
check the individual ledger balances.
I am sanguine your problem will be solved.

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Kumar Sushank (General Manager - Finance) (1040 Points)
Replied 29 November 2019

Thanks to all for giving your suggestions.

@ kapadia pravin : Mentioned bank balance in balance sheet was - 1,60,000/-

Actually he is wrongly prepare Balance Sheet on old data, and ignored actual data.

I have some more points as doubts on CA works, He is putting figure as Trade Payables (Creditors Credit Balance - Creditors Debit Balance)

But according to me both balances should shown as below in Balance Sheet.

1. Creditors Credit Balance : Trade Payables
2. Creditors Debit Balance : Advance to Supplier

Please correct me if I am wrong or I have any wrong information.

Kapadia Pravin (17259 Points)
Replied 29 November 2019

Sushank
Hi
Who is the accountant ? If it is you then it's quite easier to reconcile locate those few entries - debit or credit ...can be both....

How big is the Enterprise ?? Whatever it is but this is, I repeat, is an overnight job .

Looking at your profile (expertise in accounts), I am confident you won't need any more help.

Bye ..... Good Luck...

sabyasachi mukherjee (27574 Points)
Replied 30 November 2019

@ shawshank seperate disclosures are required
in ScheduleIII

Kumar Sushank (General Manager - Finance) (1040 Points)
Replied 30 November 2019

I am very Sorry Mr. Kapadia Pravin, If you are irritating with my post.

Actually, I got a work of a company as internal audit, Basically Management wants to know about work of his Auditors as well as accounts team.

Accounting entries can easily check & reconcile & this is not my concern, I was posting only for that if any auditors make mistake to finalize Balance Sheet then what is the law & fines.

However, It doesn't means that Accountants are not responsible for this. They are also responsible.

Kapadia Pravin (17259 Points)
Replied 30 November 2019

@ Sushank
Whatever issues are there about presentation why don't you discuss with tax auditor / statutory Auditor. After all the show is over assuming ITR is already filed.

If you are not satisfied, can go for another auditor. Not a big deal. why hue and cry here on Forum ??

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 30 November 2019

Originally posted by : Kumar Sushank
	Bank Balance is showing as negative in Balance Sheet due to some entries. I want to know that can any issue arises in future for the same. However, Auditors should checked the bank balance in statement, but they didn't check & signed this. Surprisingly he is saying that I thought this is belongs to OD A/C. What should I in that case, is it small mistake? If we are putting wrong figures in Balance Sheet, then what is the legal action can taken against directors or company.

SORRY FOR ATTENDING THIS QUERY ONCE AGAIN....

@ Mr. Kumar Sushank.,

Are You find out the Bank Account as CA or OD....?

Find out the entries in PY accounts...?

Kumar Sushank (General Manager - Finance) (1040 Points)
Replied 30 November 2019

@ Mr. Kapadia Pravin

Your words shows about you...

Behave like a professional, If you think that you have enough knowledge it doesn't mean you should start misbehave to others.

First Try to know about Forum & its meaning.

Here, Any body can ask his queries & expand his knowledge. If you do not want further notification then also there are an option Notify when someone replies (Email/Android/iOS)

Please untick this option before submit the post reply.

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