In a cash system of accounting expenses like purchases are written off at the time of incurrance. Now, certain stock of raw material is available as on the last day of the year. Whether such closing stock is to be booked and yearly profitability is to be derived thereafter or not?
In other words: whether closing stock is recognised in cash system of accounting or not? 
Menu
Cash System of Accounting
Replies (1)
Please note that in case of casy system of accounting, expenses & income are recorded only when cash is received or is paid & not at the time of incurring the expense
The system of cash accounting followed in case of a business carrying on trading/manufacturing activity is not a proper system, as there are lots of expenses for which cash cannot be given immediately & provisions are required to be made.
So I don’t think that recognising stock on cash basis is a correct procedure.
Recent Topics :
- “Income Tax Implications of Company-Related
- Advice needed: Hypothetical case of non-filing of
- Demand Raised for Cess Amount Despite Section 89 R
- WRONG BILL NO FILED IN GST R1
- Addtional trade name for my another firm
- Commission / Agency Business without books: REAL E
- Difference between AIS and 26AS data.
- Applicability of FCRA to Article Processing Fees (
- GST Return
- Practical queries on buy back of shares
Related Topics :
CAclubindia
