Cash Basis of Accounting

as per my knowledge ,in cash basis we recognise expenses as nd when incurred and inome as and when accrued.so naturally fixed assets purchased should be debited when the payment is actuaalyy made .but the issue ofdepreciation will arise .according to me when u make full payment u have to claim depreciation on retrospetive basis since the date of purchase .

what do u think ?

There should be some other way.

in case of cash basis, deprecation cannot be claimed as an expense.expense incurred till the date of closing the books can be claimed it is similar as in case of income too.

In cash system, you would account income and expenses on cash basis.

However, fixed assets should be accounted when purchased. Any capital liabilitiy also needs to be recognized.

UNDER CASH BASIS OF ACCOUNTING

1. RECORD ALL REVENUE TRANSACTIONS ON ACTUAL RECEIPT /PAYMENT OF CASH

2. RECORD ALL CAPITAL TRANSACTIONS ON ACCRUAL BASIS.

under cash basis of accounting only expenses that are actually paid in cash are recorded n incomes that are actually received in cash are recorded. there are no o/s expenses, prepaid expense etc. in the books.

In Cash basis of accounting expenses/income are booked when they earnd/expended. There are no system to accounting on credit basis.

For Example : If you are getting a bill of Telephone which was related to March but paid in April as per cash basisi of accounting transaction shall be booked in April not in march

As per acccrual/Mercantile system of Accounting you must book the expenses income in March by crediting party account.

In time of Balance Sheet you should considered only that transation which have completed means No Outstanding & No Prepaid etc.

>> Rajesh

In Cash basis of accounting expenses/income are booked when they earnd/expended. There are no system to accounting on credit basis.

For Example : If you are getting a bill of Telephone which was related to March but paid in April as per cash basisi of accounting transaction shall be booked in April not in march

As per acccrual/Mercantile system of Accounting you must book the expenses income in March by crediting party account.

In time of Balance Sheet you should considered only that transation which have completed means No Outstanding & No Prepaid etc.

>> Rajesh