Doubt - Fin. Sta. of Not for Profit Organisaton

Dear Krishna,

Remember one thing that Income & Exp. A/c records only revenue items of current year. In other words, it follows accrual concept. 

Since in the adjustment payment for repairs is through cheque, it means all the  payment of repairs are routed through Bank.

So when you follow Accrual concept to record the Exp for the year, you will have to make certain adjustments to payment made through bank(Rs 500)

Hence,   Payment made through Bank during the year      Rs 500

                Less-- Unpresented cheque in begng.---                     Rs (300)

                Add --- Unpresented cheque at the end of year       Rs 260

Amount to be charged to I & E A/c                                                Rs 460

Unpresented cheque in the beg(Rs 300) means you are liable to pay the amount for the previous year and hence its deducted from the current year total payment made(Rs 500)

Similarly, Unpresented Cheque at the end(Rs260) denotes you are liable to pay that amount in the year itself and hence its added to the total payment made(Rs 500)

Hope you understood... Any more question on it feel free to ask...

GUD EXPLANATION

Regarding your this question--  " While the same is not deducted if the Cash and Bank balance are given together."

The simple reason lies in the books which you prepare. In your above question Balance in bank is as per pass book but you prepare statement as per your books. That is why we make those adjustment to give effect to those unpresented cheques as per accrual concept.

When it is combined, it means the  opening balance is as per your books and all the adjustments get embeded as and when transaction take place. The result(closing balance) is also the bank/cash balance as per your books. So no adjustment required seperately.

Hope you now understood.

It is really fruitful for me. Thank you so much for giving me your valuable time or such a wonderful explanation. I am really greatful to you.

Regarding the question,do we need to show that ₹260 on liability side of balance sheet?? 

I just searched up " cheque unpresented being payment for repairs " on google , and click on the 1st link unconsciously . Now thats the exact extract of the qn. I am solving currently and got confused . Now I am all set 👍. Someone's confusion from almost 14 years ago helped me today 😃. Currently in cap 2 , Nepal . Thanks to all for post and explanation.