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Cash introduced

yasaswi gomes (My grammar is 💯 good I) (7290 Points)

01 April 2022

Hi,

How can an owner introduce cash into a startup buainess to tally his balance sheet without a dual aspect transaction ie., Capital account will not be increased but he will drop a check and disclose it.

Txs

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9 Replies

CA Raj Doshi (Practising CA) (8924 Points)
Replied 02 April 2022

I have seen proprietor's wanting to show own funds in the business as a loan by the properitor to the proprietary concern thereby no increase of capital ( i.e no involvement of capital account ledger ). This would sound right legally but not as per industry practices.

2 Like

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 02 April 2022

This is unique and I hope no need for loan liability account as well.

1 Like

Eswar Reddy S (CFO- at NHTF) (58270 Points)
Replied 02 April 2022

Check whether the difference is due to difference in opening balances .

If the difference is due to current year then accounting might not be proper .. Use accounting software's to avoid missing of double entry concept

1 Like

CA Puja Sharma (Chartered Accountant) (5010 Points)
Replied 02 April 2022

Yes the vcahs can only be introduced wither by way of capital introduction or loan.

Please look into the provisions for loan in cash form.

1 Like

Eswar Reddy S (CFO- at NHTF) (58270 Points)
Replied 02 April 2022

A person can't take loan from himself..If the business is started during the FY then there should not be any difference..It might be due to missing of accounting entries

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 07 April 2022

For the amount of capital raised,

set up expenses out of it,

sales with perfect mark-up is tallying the balance sheet.

I think, the more perfect all the payments and receipts including taxes, this difference will not raise.

This MC=MR or optimal pricing or breakeven sales concepts are also not working. My flaw is, I only know GST and not complete taxation.

So I introduced cash into bank as a non commercial transaction and can claim it in my dividends because it is just a small amount (5,000 - 50,000).

I dont know how start-up advisory companies do the projections. I have attached a sample excel here to understand what I am doing. Everyone is patient enough.

Attached File : 2750458 20220407201959 foreign subsidiary consolidation ifrs indas.xlsx downloaded: 161 times

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 10 April 2022

Hi all, i finally got my balances tallied with solver without any adjustments

https://yasaswigomes.blogspot.com/2022/04/start-up-company-accounting-in-nutshell.H T M L

Eswar Reddy S (CFO- at NHTF) (58270 Points)
Replied 12 April 2022

Without introduction of cash also it is possible if you maintain the proper books of accounts

1 Like

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 17 April 2022

After struggling a bit, I got it and perfected one method. Now, I am stuck with allocation of goodwill.

I got the good will from new method formula.

Now I am trying to eliminate DTA and DTL (deferred taxes) like

Consideration

1.assets excluding goodwill/DTA

2. add DTA to above

3. Liabilities excluding DTL

4. Add DTL to the above

5. Subtract 1+2 - (3+4)

then it is giving me equity number. When I subtract equity from consideration, I am getting a number which needs to be added to goodwill it seems. My problem is good will is negative here in lakhs while the actual good from 'new method' goodwill is in thousands. Why is this allocation making good will number to increase?

It is useless because resources dont address income taxes standard in regards to business combinations DTA's. Next, after acquisition it does not mention that share exchange amount must be an investment asset in subsidiary's books.

Attached File : 2750458 20220417221636 consolidation.xlsx downloaded: 98 times