Method of accounting for professional company

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nishit (Querist)
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23 August 2014 As per companies act it is mandatory to follow Mercantile system of accounting.

But, professional entity is required to follow cash system of accounting.

Can anyone guide Professional compnay has to follow cash or mercantile systme of accounting.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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23 August 2014 who said professional entity is "Required" to follow cash system?? Last I checked there was no rule for this!

A company has to follow mercantile basis whatever may its activities be.

a professional entity has the option of following the accounting basis, be it mercantile or cash.