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query

Deepak (student) (104 Points)

29 September 2009

i was a question in an interview that how can profit be reduced when there is no cash in balance sheet . what can be done to reduce the profit

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8 Replies

CA.kaya (Chartered accountant) (3990 Points)
Replied 29 September 2009

increase in non cash expenses. like depreciation!!!

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Manish Soni (CA , CS) (828 Points)
Replied 29 September 2009

Also u can make provision for expenses so as to reduce profit without having cash in B/S

Deepak (student) (104 Points)
Replied 29 September 2009

but how can depriciation be incresed (depriciation rates are fixed).Kaya can u explain.

Manish sir r u referring for creating fake provision then how can we settle them.Pay them or reverse them

Any way thanks to both of u

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 30 September 2009

it will be better to reverse to reverse them........ another way to reduce profit without incurring cash expenses is to write-off the sundry debtors from which balance standing for 3 years or more.....

ashish gupta ( student) (1922 Points)
Replied 30 September 2009

another way is to reduce the closing stock figure.

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Amar Oza (Accountant Cum internal Auditor) (32 Points)
Replied 30 September 2009

First u have to ask the intervieur that why they reduse the profit ???

Then also he know more about this then u have to tell that it was not redused by You, , , Becoz it may be happen that he just test your honesty & loyelti................