if there is shortage of cash in books but in actual there is no such shortage then how to balance this cash in books as in actual there is no such shortage of cash.
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Quick Summary
This discussion addresses the common accounting problem of a cash shortage appearing in business books when there is no actual shortage. Experts suggest identifying the root cause, such as unrecorded sales or overstated expenses, and making necessary rectifications. If excess cash is available, it can be deposited in the bank, but it's crucial to establish the source of the cash and record it appropriately, whether through capital introduction, sales, or loans, while avoiding questionable practices.
It will be easier to say exactly what is the nature of business entity is involved in and type of entity i.e proprietorship or partnership. And why there is excess cash in hand than books. Otherwise simply Pass a cash brought in entry through capital account or cash sales etc..
if there is shortage of cash in books but in actual there is no such shortage then how to balance this cash in books as in actual there is no such shortage of cash.
This is accounting issue. Either you have not accounted cash collected from customers in books, or under-reported cash sales in books or excess reporting of cash expenses in books as against actual. Identify these and do necessary rectification.
There must be some source for the cash receipts. They won't come out of thin air right. If the source is cash sales, Debit cash and credit sales. If the source is some hand loan taken from relatives or friends, Debit cash and credit their respective names
But like Mr. Pravin said if u r Trying to hide something from books or something, avoid such questions in open forum. Either message privately or ask ur consultant
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