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Settlement entry

Vidhya Chandran J (CA Article) (93 Points)

26 July 2016

advance given to supplier at the time of the institution managed by State Govt. but settlement came after the institution adopted by Central Govt. So actually no outflow of fund from New source of funds. But settlement entry must be passed in new accounts. Please mention the necessary entries for the settlement of such advance for the purpose of statutory audit closure......

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mohammad rasool baig (Management Consultant) (1026 Points)
Replied 28 July 2016

At the time of advance payment made by state institution, we will pass entry in books of state institution. So it will be standing as current asset in books of state institution.

While acquiring the state institution by central (100%) then all assets & liabilities will be transferred to central institution.

In that case, central institution already accounted the advance payment (through indirect way).

Now please pass the entry only for the settlement by considering advance.

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Vidhya Chandran J (CA Article) (93 Points)
Replied 28 July 2016

Ok thank you sir.... but the particular amount of advance also included in generel reserve of the state insttution. so it is also effect the generve reserve balance of the central institution???