Cash Credit balance in a bank having Debit balance!!!

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Rajesh (Querist)
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07 July 2010 In an audit i just noticed in the balance sheet dated 31st march 2010 the Cash credit balance of a client is showing debit balance say around Rs. 22 lakhs. But the bank balance shows just Rs. 10000 debit balance. If the CC balance shows debit balance around Rs. 22 lakhs means it should also represent in the bank balance should also show around 22 lakhs know?

Even if they have BRS means there cannot be this much difference know?

Please clarify me regarding this.

Thanks all the experts.
With regards,
Rajesh

CA SMR

CA SMR (Expert)
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07 July 2010 I suggest that you check the subsequent transactions in the bank statement.That may justify the huge difference between the debit balance in the CC account ,as per the books of accounts and as per the bank statement.

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Rahul Gupta

Rahul Gupta (Expert)
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07 July 2010 Agree with expert. There must be something genuine which should justify the huge difference and debit balance.

BRS existence does not mean that the transaction is genuine. Check the need behind such huge difference. Any special event or some deposit made by co. but not considered by bank, or any reversal not given effect in Account Books, just to strengthen the B/s.

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