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PROJECTED FINANCIAL STATEMENTS

PANDIAN BRIGHT (TAX CONSULTANT) (331 Points)

13 May 2020

My Client Needs Projected Financial Statements for 3 years. Because he applied for Bank OD facility of Rs.1 crore. Here I disclose the Bank OD of Rs.1 crore as Current liabilities under liability side of balance sheet. My query is how to tally the 1 crore against the asset side?

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Asha Kanta Sharma (Manager - Finance & Accounts) (36355 Points)
Replied 14 May 2020

See, Bank OD of 1 crore is just an limit upto which one can use funds from Bank. It is not a DIRECT/STRAIGHT liability in the books of accounts until the business has used all 1 Crore balance facility for full amount. The liability in the books of accounts will be the amount of which business has used in OD facility lets say it has used upto 10 lacs, 15 lacs etc. that will be shown as Bank OD in the books of account and not the fully available OD limit of 1 Crore. Secondly when Bank OD is being used to fund purchase of assets or payment of liabilities all these will have a double entry impact which will reduce the Accounts Payable or Increase the Assets (Current/Fixed)