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Cash basis of accounting

Guddi (employee) (769 Points)

21 August 2009

Dear All,

I am doing a Statutory Audit of a small firm which maintains its books of accounts on cash basis. Pleas tell me the aspects to be taken care of in a cash basis of accounting?

Thanx in Advance.

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2 Replies

Satish (CA Final Student) (479 Points)
Replied 21 August 2009

Auditing in a cash basis environment is comparatively easy than in mercantile. You need to vouch for actual cashflows i.e. all expenses & incomes actually incurred for cash or by cheques during the financial year under audit. The journals would be only for depreciation & amortisations. No provisions are required to be made in the balance sheet.