Why Balance Sheet do not tally? Mistakes made by students in Balance Sheet
Why Balance Sheet don't tally?
In the subject of Accountancy, we all are concered with matching the both sides of balance sheet.
We think that if balance sheet matches, our answer is correct.
But it is not like that.
You may have observed that when we omit both the effect of any adjustment, then too balance sheet matches but total amount is different.
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So don't focus on matching balance sheet,
Do right posting, balance sheet is ought to tally.
Understand why and where the effects of transaction are given.
Learn all the concepts.
When balance sheet do not matches you can do following things
1. Check the difference amount.
2. Check if there is any transaction unposted of the difference amount.
3. Check whether all the items given are posted properly with their effects.
4.Sometimes there are hidden adjustment like 10% Govt. Bonds. Mark that Item. Its effect is Balance sheet asset side as 10% Govt.Bond.
But its hidden effects are:
First: Profit and Loss AC Credit side as By Interest on Govt. Bonds
Second: Balance sheet Asset side as Interest Receivable
So check for such hidden adjustment and mark them.
Examples of such adjustments are salaries(10 months), advertisement (3 years), etc.
5.Check whether you have done correct calculations.
6. In Chapter NPO,
There are various funds like prize fund, building fund, etc. They appear on Liability side.
Similarly there is Prize fund investment and building fund investment on Asset side.
INTEREST ON INVESTMENT OF FUND SHOULD BE ADDED TO FUND ON LIABILITY SIDE.
INTEREST SHOULD NOT BE SHOWN AS INCOME IN INCOME AND EXPENDITURE AC.
BECAUSE PRIZE FUND IS OUR LIABILITY, SO WE HAVE NO RIGHT TO USE INTEREST ON ITS INVESTMENTS.
To know How to study BCK click below
https://cakipadhai.blogspot.com/2019/04/how-to-study-bck.html?m=1
All Notes and PPT will be uploaded till May 1st week tentatively.
Our next Article will be of Preparation strategy for Law, Accounts for CA Foundation.
Our Blog Link
https://cakipadhai.blogspot.com/
Stay updated about our posts
Follow us
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Do share with your friends:
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Feel free to comment your any query or suggestions.
If you want us to start posting in hindi also then please comment down.
In the subject of Accountancy, we all are concered with matching the both sides of balance sheet.
We think that if balance sheet matches, our answer is correct.
But it is not like that.
You may have observed that when we omit both the effect of any adjustment, then too balance sheet matches but total amount is different.
JOIN OUR TELEGRAM CHANNEL FOR POST UPDATES
t.me/cakipadhai
So don't focus on matching balance sheet,
Do right posting, balance sheet is ought to tally.
Understand why and where the effects of transaction are given.
Learn all the concepts.
When balance sheet do not matches you can do following things
1. Check the difference amount.
2. Check if there is any transaction unposted of the difference amount.
3. Check whether all the items given are posted properly with their effects.
4.Sometimes there are hidden adjustment like 10% Govt. Bonds. Mark that Item. Its effect is Balance sheet asset side as 10% Govt.Bond.
But its hidden effects are:
First: Profit and Loss AC Credit side as By Interest on Govt. Bonds
Second: Balance sheet Asset side as Interest Receivable
So check for such hidden adjustment and mark them.
Examples of such adjustments are salaries(10 months), advertisement (3 years), etc.
5.Check whether you have done correct calculations.
6. In Chapter NPO,
There are various funds like prize fund, building fund, etc. They appear on Liability side.
Similarly there is Prize fund investment and building fund investment on Asset side.
INTEREST ON INVESTMENT OF FUND SHOULD BE ADDED TO FUND ON LIABILITY SIDE.
INTEREST SHOULD NOT BE SHOWN AS INCOME IN INCOME AND EXPENDITURE AC.
BECAUSE PRIZE FUND IS OUR LIABILITY, SO WE HAVE NO RIGHT TO USE INTEREST ON ITS INVESTMENTS.
To know How to study BCK click below
https://cakipadhai.blogspot.com/2019/04/how-to-study-bck.html?m=1
All Notes and PPT will be uploaded till May 1st week tentatively.
Our next Article will be of Preparation strategy for Law, Accounts for CA Foundation.
Our Blog Link
https://cakipadhai.blogspot.com/
Stay updated about our posts
Follow us
https://www.instagram.com/ca_ki_padhai/
Do share with your friends:
https://cakipadhai.blogspot.com/
Feel free to comment your any query or suggestions.
If you want us to start posting in hindi also then please comment down.
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