Annual Budget to CC

This query is : Resolved

Chandrakant Patkar (Querist)
Follow

21 February 2022 Dear all, I want to know that in Schedule 7A , for Opening cash and Opening Cash at bank , balance of which date we have to consider or do we have to deduce ? how to calculate on approximate basis?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
Follow

06 July 2024 In Schedule 7A of financial statements, especially for companies, "Opening cash and cash equivalents" and "Opening balances of cash at bank and in hand" refer to the balances at the beginning of the financial reporting period. Here’s how you typically approach these:

1. **Opening Cash and Cash Equivalents**: This includes cash on hand and demand deposits (like bank accounts) that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value. The balance reported here should reflect the amount on the first day of the financial reporting period.

2. **Opening Balances of Cash at Bank and in Hand**: This specifically refers to the cash balances held in bank accounts and physical cash on hand at the start of the financial year or reporting period.

### Calculation on an Approximate Basis:

To calculate these balances approximately:

- **For Cash on Hand**: Review the last financial statement or accounting records from the end of the previous reporting period to determine the closing cash balance. This closing balance becomes the opening balance for the new period.

- **For Cash at Bank**: Similarly, check the closing balances of bank accounts at the end of the previous reporting period. The total of these balances becomes the opening balance for cash at bank in the new period.

### Deductions or Adjustments:

- If there are any outstanding checks or transactions that were initiated in the previous period but cleared in the new period, they may need to be adjusted.
- Any deposits or withdrawals between the closing date of the previous period and the opening date of the new period should be accounted for to ensure accuracy.

### Practical Steps:

- Use the closing balances from the previous financial statements.
- Ensure all transactions between the closing date and opening date are correctly accounted for to reflect accurate opening balances.
- Reconcile these balances with bank statements and cash books to verify accuracy.

For precise calculation and reporting in Schedule 7A, it’s recommended to follow specific accounting standards and guidelines applicable in your jurisdiction, and consulting with a financial advisor or accountant can provide tailored advice based on your company’s financial reporting requirements.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now