Ashmi Shettyashmi shetty asked 1 year ago
3 Answers
RaviRavi Staff answered 1 year ago

It is schedule III based question.
Crux of question.
Company is having current account with bank, bank transfers excess balance to fixed deposit or they called it flexi deposit.  so bank will show say Rs 5000 balance in current account and Rs 2,00,000 as flexi deposit.
when bank receives cheque they transfer FD to bank account and make payment, this is common practice now a days.
now company issued cheque, say of Rs 1,80,000 , now company passed payment entry so balance of 5,000 became negative balance of 1,75,000 in books of company thats is OD.
cheque is not yet sent to bank , so bank is showing full flexi deposit.
as per schedule III, if od and fd belongs to same bank and bank has right to adjust negative of OD with FD balance then these balance should be netted and then shown in balance as net od or net fd on asset side.
in current situation bank has right to adjust , transfer between OD & FD so company should show net balance and not separate balance. so presentation of company is incorrect 

RaviRavi Staff answered 1 year ago

if you understand it, you will remember it, in this quesiton

Ashmi Shettyashmi shetty answered 1 year ago

thank you sir

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