Hey everyone,
I wanted to know that if its okay that an entity recognises all expenses on cash basis through out the year without actually making any expense due and on the closing date it passes entries for outstanding expenses. Does it comply with AS 9-Income Recognition and Matching Concept?
Thanks in advance.
It does not comply with AS 9, because the 'Accounting Policy' is not accrual. The entity is only adjusting its year end disclosures to comply with AS 9. In order to achieve compliance with AS 9, the policy has to be followed throughout the year. Otherwise it is mere year end adjustment.
Hope I am clear.
Saini Pati Shah & Co LLP, Chartered Accountants
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