Doubt - Fin. Sta. of Not for Profit Organisaton

Krish (CA Final ) (3331 Points)

01 August 2010  

Can anyone please tell me why we deduct the difference of unpresented  cheque on corresponding expenses if Bank and Cash Balances are given separately. While the same is not deducted if the Cash and Bank balance are given together.

 

For Eg.  In Receipt and Payment A/c, we have following information.

 

Receipt

Amount

Payment

Amount

Balance at Bank as per Pass Book

600

Other payments

-

Cash in hand

100

Repairs to Equipment

500

Other Receipts

-

Balance at Bank as per Pass Book

150

-

 

Cash in hand

250

 

Additional Information :                                              Jan 1 2008                            Dec 31 2008

Cheques unpresented being payment for repairs             300                                         260

 

Solution : We will take Rs 460 (500 – 40) as Repairs under Expenditure for Income and Expenditure A/c.

 

But in the case if Cash and Bank Balance are given separately. We will not deduct the difference amount and take the same amount i.e. 500.

 

Can anyone please tell me. What is the actual concept behind these treatment.

 

Please help me out.