Hi All,
If any one can help me to know that How to maintain accounts in Cash basis system of accounting. Specifically regarding how to claim depreciation, booking for purchase of Fised assets on credit.
Jatin Jindal (CA) (82 Points)
16 December 2008Hi All,
If any one can help me to know that How to maintain accounts in Cash basis system of accounting. Specifically regarding how to claim depreciation, booking for purchase of Fised assets on credit.
AMIT ADHIA
(ca)
(110 Points)
Replied 16 December 2008
as per my knowledge ,in cash basis we recognise expenses as nd when incurred and inome as and when accrued.so naturally fixed assets purchased should be debited when the payment is actuaalyy made .but the issue ofdepreciation will arise .according to me when u make full payment u have to claim depreciation on retrospetive basis since the date of purchase .
what do u think ?
Anil Sankar V
(CA)
(1877 Points)
Replied 22 December 2008
Vijay gandhi
(consultant)
(567 Points)
Replied 17 January 2009
in case of cash basis, deprecation cannot be claimed as an expense.expense incurred till the date of closing the books can be claimed it is similar as in case of income too.
Ritesh Sharma
(CA)
(58 Points)
Replied 17 January 2009
In cash system, you would account income and expenses on cash basis.
However, fixed assets should be accounted when purchased. Any capital liabilitiy also needs to be recognized.
payal
(student)
(106 Points)
Replied 18 January 2009
UNDER CASH BASIS OF ACCOUNTING
1. RECORD ALL REVENUE TRANSACTIONS ON ACTUAL RECEIPT /PAYMENT OF CASH
2. RECORD ALL CAPITAL TRANSACTIONS ON ACCRUAL BASIS.
triumph-CMA
(Chartered Accountant)
(503 Points)
Replied 19 February 2009
under cash basis of accounting only expenses that are actually paid in cash are recorded n incomes that are actually received in cash are recorded. there are no o/s expenses, prepaid expense etc. in the books.
In Cash basis of accounting expenses/income are booked when they earnd/expended. There are no system to accounting on credit basis.
For Example : If you are getting a bill of Telephone which was related to March but paid in April as per cash basisi of accounting transaction shall be booked in April not in march
As per acccrual/Mercantile system of Accounting you must book the expenses income in March by crediting party account.
In time of Balance Sheet you should considered only that transation which have completed means No Outstanding & No Prepaid etc.
>> Rajesh
In Cash basis of accounting expenses/income are booked when they earnd/expended. There are no system to accounting on credit basis.
For Example : If you are getting a bill of Telephone which was related to March but paid in April as per cash basisi of accounting transaction shall be booked in April not in march
As per acccrual/Mercantile system of Accounting you must book the expenses income in March by crediting party account.
In time of Balance Sheet you should considered only that transation which have completed means No Outstanding & No Prepaid etc.
>> Rajesh
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