A Dwarika Nath Subudhi (Manager Audit) (27 Points)
27 April 2011A Firm follows books all his sales invoice as per the accrual method of accounting through out the year & at the end of the year it reverses the pending invoices & present it's financials as cash basis. How ever it follows cash basis of accounting for booking of expenses.
will the books of accounts be rejected by any authority?
Is this method of accounting is correct?
Devendra
(Chartered Accountant)
(4775 Points)
Replied 27 April 2011
THE METHOD YOU DESCRIBED IS NOT PROPER FOR MAINTAINING THE BOOKS OF ACCOUNTS. THE BOOKS SHOULD BE MAINTAINED UNDER THE ACCRUAL / MERCANTILE BASIS OF ACCOUNTING.
REGARDS,
DEVENDRA
A Dwarika Nath Subudhi
(Manager Audit)
(27 Points)
Replied 28 April 2011
Once the firm reverses the pending bills at the end of the year, the books are in cash basis only.........
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