Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Bank reconciliation

john (LEARNER) (549 Points)

09 May 2010

if i maintain bank book of a company, by directly making entries from the BANK STATEMENT, and do not prepare any BRS.

is there any specification for such that i cannot, or the ITO may have any problem with that way of accounting.

plz highlight.

Reply
Follow
Share

9 Replies

binit kumar jindal (chartered accountant) (129 Points)
Replied 09 May 2010

there are two way to make accounting

1 cash

2 mercantile or accrual basis

if u make whole account by cash basis then no problem

but if u make account by mercantile syestem then u have to make your qwn bank a/c .

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8311 Points)
Replied 09 May 2010

Yes Mr. Binit is right

vikash rathi (Chartered Accountant) (787 Points)
Replied 09 May 2010

mr. binit is totally right....

CA Shammi Prabhakar (Managing Director) (2076 Points)
Replied 10 May 2010

practically it's not recommendable for your co. if large scale transactions are occuring on daily basis . bqz you can't track all the transactions by referring bank statement only.. bqz.. some times bank statement do not reflect all the required ref. for identification of transaction...

for ex... let say.. if you paid someone by cheque .. and he has not deposited the cheque into bank .. than how can you track his account.. bqz he has 6 months time to deposit the cheque into bank..

CMA Arif Farooqui (Cost Accountant) (4798 Points)
Replied 10 May 2010

no problem if you are following cash basic accounting. normally accountants do this when a large no of cheque are bouncing of their company. but problem is what Mr. Shammi has mentioned.

Upgrade to CAclubindia Pro. Subscribe Now!

sksrinivas2009 (Asst Manager-Accounts) (44 Points)
Replied 13 May 2010

I agree with Binit and Shammi, U are prepared with ref of Bank stament, there is no control. The system will complete wrong. So that every body should follow the accrual basis method only.

Kalpesh Chauhan, (Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)) (8311 Points)
Replied 10 June 2010

I have uploaded the suggestions for the students for download purpose.

Kindly follow the below link.

1.For IPCC and PCC - Cost FM

https://www.caclubindia.com/forum/important-suggestions-for-pcc-and-ipcc-students-for-cost-amp-fm-86545.asp

2. For IPCC and PCC - Law, Ethics and Communication

https://www.caclubindia.com/forum/important-suggestions-for-pcc-and-ipcc-students-for-law-eth-86515.asp

CA PuRvI M!$rA (-) (2260 Points)
Replied 11 June 2010

Originally posted by : binit kumar jindal
	there are two way to make accounting 1 cash 2 mercantile or accrual basis if u make whole account by cash basis then no problem but if u make account by mercantile syestem then u have to make your qwn bank a/c .

totally agree with binit...

1 Like

RAJU (LEARNER) (1089 Points)
Replied 11 June 2010

Cash system of account does not mean that you account the receipts and payments on clearance of cheques in the bank account. Ideally, the transactions are required to be accounted as and when the dues are settled. Accounting of Income on receipt of cheque and payment will be the appropriate way of accounting. There may be some transactions in the year end which might left unaccounted in the event of accounting the transactions based on entries in the bank statements.