01 July 2019
Source of income of a non-profit making entity like a housing cooperative society is only its members' contributions. The society invests a portion of such contributions in bank fd in a certain financial year and shows it as asset in the balance sheet of that year. The fd matures next year and is reinvested, both original capital and interest together. The matured amount is again shown as asset in that years's balance sheet. Now, the problem is if the interest earned on the original capital is not included in the liability side of the balace sheet, the two sides (liability and asset) are not matching. Should it be done so and will it be in conformity of accounting procedures?
02 July 2019
No, it's not in conformity of accounting procedures. Include interest earned on the original capital in the liability side of the balance sheet.
CAclubindia
