Accrual accounting system
Querist : Anonymous
I have a case about a an Investment (private limited )company
which maintaining books of account on mercantile basis.
But company records income on receipt basis from April to Feb and in the month of march a consolidate receivable from April to Feb is recorded and for month of march on receivable basis.
my question is that is this practice of following cash basis accounting for 11 month and in March remaining receivable on consolidate basis i.e.(receivable less received) and for only month of march on pure receivable basis is Correct ???
Means following cash basis accounting for 11 months and Accrual basis accounting in month of march is correct or it will be treated as hybrid system.
Is there any clarification from ICAI or Department for following accrual basis accounting through out the year?
Pls join in discussion
Also AS 1 requires books of accounts to be maintained on accrual basis.
Accordingly, in the above case, the company has violated the provisions of Section 209.
Querist : Anonymous
But looking to query overall all effect in the month of march for accrual is made.
Please clarify one point that is it compulsory for company to record transaction trough out the year on accrual basis or one accumalated entry in the month of march is is correct ?
Querist : Anonymous
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