Cash accountancy method

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anand (Querist)
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07 October 2012 if we file income tax return with adopting cash accounting method can we show creditiors and debtors in balance sheet. i have a confusion that if we adopt cash method that creditors and debtors should not be created in balance sheet. please mail me with answer

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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08 October 2012 Under cash accounting system, income and expense is recognised when the same is realised or paid, as the case may be.

Therefore, debtors and creditors will not appear in the Balance Sheet.

Prakash Kochar

Prakash Kochar (Expert)
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08 October 2012 If the secured loan is obtained from bank, or amount is invested in FD with bank how it will be accounted and will it not appear in balance sheet?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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12 October 2012 Secured loan will be shown in the Balance Sheet.

Also FD will be shown as investment. The accrued interest shall be shown as income if accrual basis of accounting is followed.

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