Treatment of chit finance in financial statements
This query is : Resolved
15 July 2017
Sir,
one of my relative have account with KSFE(Chit)..I would like to know the treatment of his chit fund in the preparation of financial statements....is it shown on p&l or Balance sheet....please guide me
one of my relative have account with KSFE(Chit)..I would like to know the treatment of his chit fund in the preparation of financial statements....is it shown on p&l or Balance sheet....please guide me
15 July 2017
Investment in chits has to be shown in the Balance Sheet.
15 July 2017
k sir, what about interest
02 August 2025
Hey! For chit funds like KSFE:
* **Investment in chit fund**: shown as an **asset** in the Balance Sheet under **Investments** or **Other Financial Assets**.
* **Interest or Dividend** received (if any) during the period: shown as **Income** in the Profit & Loss account under **Other Income** (often as "Interest Income" or "Dividend Income").
* If your relative **wins the chit** and receives a lump sum, that amount (net of contributions) can be treated as **income**.
* If there are **subscriptions/contributions** made towards the chit fund, those are considered as investment amounts, not expenses.
---
So:
| Item | Accounting Treatment |
| ---------------------------- | -------------------------------- |
| Amount invested | Balance Sheet (Investment asset) |
| Interest earned | P\&L (Other Income) |
| Lump sum received on winning | P\&L (Income) |
If the chit is treated like a **financial instrument or investment**, this is the usual way.
Let me know if you want me to help with sample journal entries!
* **Investment in chit fund**: shown as an **asset** in the Balance Sheet under **Investments** or **Other Financial Assets**.
* **Interest or Dividend** received (if any) during the period: shown as **Income** in the Profit & Loss account under **Other Income** (often as "Interest Income" or "Dividend Income").
* If your relative **wins the chit** and receives a lump sum, that amount (net of contributions) can be treated as **income**.
* If there are **subscriptions/contributions** made towards the chit fund, those are considered as investment amounts, not expenses.
---
So:
| Item | Accounting Treatment |
| ---------------------------- | -------------------------------- |
| Amount invested | Balance Sheet (Investment asset) |
| Interest earned | P\&L (Other Income) |
| Lump sum received on winning | P\&L (Income) |
If the chit is treated like a **financial instrument or investment**, this is the usual way.
Let me know if you want me to help with sample journal entries!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- House Property Reporting in ITR
- Internship/Academic shown in Salary Pay Slip of a Doctor
- TDS Claim year
- Liable to deduct tds and 44ADA
- Refund of 20%pre-deposit paid for stay application
- Rent lease agreement
- TDS Challan Code
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- Relief u/s Section 89
- Supply through E-commerce Operators
- STCG on ETF gold & silver
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
