| Question And Answer | |
|---|---|
| Subject: | Cash basis to Mercantile basis of accounting |
| Category: | Income-Tax |
| Querist: | Kiran |
| Answered by: | Law Intern |
| Tags: | mercantile system of accounting |
| Date: | August 6, 2025 |
My client want to shift from cash basis to Mercantile basis of accounting, but some services rendered in Mar last week and bill prepared in April. How to give effect of the bills in financials.
In order to follow the mercantile basis of accounting, the income from the services will have to be accounted in the month of rendering the services i.e. in March itself. You can pass a JV as follows:
Client A/c (or Services Rendered A/c) ….Dr
To Income from Services A/c …………..Cr
If the Bills have been accounted in April, they will have to be reversed by a JV.
Disclaimer: This article is only for general information and is not intended to provide legal advice. Readers desiring legal advice should consult with an experienced professional to understand the current law and how it may apply to the facts of their case. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this article nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org