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Cash amount on balance sheet

Arpit (article) (116 Points)

15 March 2014

how much cash balance show in balance sheet of property dealer having net income 200000 and bank balance nill. the return is filling first time.

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(Guest)

1. Ask your client about the assets and liabilities he has on 1/4/2012 (Assuming that the accounts are for 2012-13 FY)- this will be your opening balance sheet.

2. Based on that prepare detailed accounts in tally till 31/3/2014. Cash balance will come automatically.

It is necessory to invest some quality time in making the opening BS as no asset or liability should be missed out.

(If you prefer to file return u/s 44AD, show that cash balance as any reasonable amount which the client keeps in his office+ home at any day. Also check his bank a/c, if he has made large deposits in the 1st few days of the next month, that will be your cash in hand)

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CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 15 March 2014

Originally posted by : Madhavi Pandit
	1. Ask your client about the assets and liabilities he has on 1/4/2012 (Assuming that the accounts are for 2012-13 FY)- this will be your opening balance sheet. 2. Based on that prepare detailed accounts in tally till 31/3/2014. Cash balance will come automatically. It is necessory to invest some quality time in making the opening BS as no asset or liability should be missed out. (If you prefer to file return u/s 44AD, show that cash balance as any reasonable amount which the client keeps in his office+ home at any day. Also check his bank a/c, if he has made large deposits in the 1st few days of the next month, that will be your cash in hand)

Yes according to this information first try to make ur opening balance sheet if ur business is started in this year itself then there not be any opneing balnce in such a case whatever fund lying with u shall be cash or bank. This may be find out thorugh the ledger preparation of cash and bank post all the item going from throgh this ledger during the year and take opening balance as the amount of investment at begining,.

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Arpit (article) (116 Points)
Replied 17 March 2014

can i show cash balance upto 6 lac in balance sheet and other assest amount is rs 200000. person is small proterty dealer and income upto exemption limit. return is filling first time.

Puneet Goyal (Student CA Final ) (45 Points)
Replied 17 March 2014

You can show any amount but you have to prove the same if it comes under scrutiny. That amount of cash is too much for your client. As approx 3 years of his income is with him in cash

Arpit (article) (116 Points)
Replied 17 March 2014

return is filling first time and bank balance is nill so i will showning cash amount 6 lac

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CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 17 March 2014

arpit its not the point u can show it or not bcs as per accounting policies adopted generaly by entities they avoid to maintain huge liquidty. infact if u cary such cash balnce there is general perception of people that the entity is operating with liquid assets and it may by converting blak money.so for better its to show some current assets instead of cash. however if u fall under scrutiny u have to show all relevant docmnts that on the date of reporting u realy have cash position as u have shown in BS. u are not supposed to show cash on the date of investigation. bcspractically it not possible bcs cash may be differ day to day.

(Guest)

Agree with Mr Saroj. 6 lac cash raises eyebrows as his business does not require maintenance of such huge cash bal.

Gautam (Employee) (191 Points)
Replied 23 March 2015

Arpitji just tell me what is the support income document in your client business. I think everything will be routed through cash. B/s & P/L are just formality don't need to file with ITR