{"id":22406,"date":"2022-06-05T00:47:48","date_gmt":"2022-06-04T19:17:48","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=22406"},"modified":"2026-01-07T22:54:07","modified_gmt":"2026-01-07T17:24:07","slug":"books-of-accounts-financial-statements-of-company","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/","title":{"rendered":"Books of Accounts &#038; Financial Statements of Company"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d2374cc4050\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d2374cc4050\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Books_of_Accounts_Financial_Statements\" title=\"Books of Accounts &amp; Financial Statements\">Books of Accounts &amp; Financial Statements<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#The_Financial_Statement_of_the_company_should_include_%E2%80%93\" title=\"The Financial Statement of the company should\u00a0include: &#8211;\">The Financial Statement of the company should\u00a0include: &#8211;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Maintenance_of_books_of_accounts_of_the_company_at_different_Place\" title=\"Maintenance of books of accounts of the company at different Place\">Maintenance of books of accounts of the company at different Place<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Books_of_Accounts_of_the_company_should_be_kept_in_Electronic_Form\" title=\"Books of Accounts of the company should be kept in Electronic Form:\">Books of Accounts of the company should be kept in Electronic Form:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Company_Annual_Filling\" title=\"Company Annual Filling \">Company Annual Filling <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Financial_Year_of_a_Company\" title=\"Financial Year of a Company\">Financial Year of a Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Different_Financial_Year_than_April_%E2%80%93_March\" title=\"Different Financial Year than April &#8211; March\u00a0\">Different Financial Year than April &#8211; March\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Accounts_of_Branch_Office\" title=\"Accounts of\u00a0Branch Office\">Accounts of\u00a0Branch Office<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#Inspection_of_Books_of_accounts\" title=\"Inspection of Books of accounts\">Inspection of Books of accounts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#How_Preservation_of_Books_of_Accounts\" title=\"How Preservation of Books of Accounts?\">How Preservation of Books of Accounts?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#FAQs_ON_BOOKS_OF_ACCOUNTS_FINANCIAL_STATEMENTS\" title=\"FAQ\u2019s ON BOOKS OF ACCOUNTS &amp; FINANCIAL STATEMENTS\">FAQ\u2019s ON BOOKS OF ACCOUNTS &amp; FINANCIAL STATEMENTS<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#CASE_STUDY_BASIS_ON_REAL_SITUATION\" title=\"CASE STUDY BASIS ON REAL SITUATION\">CASE STUDY BASIS ON REAL SITUATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/carajput.com\/blog\/books-of-accounts-financial-statements-of-company\/#What_are_the_law_related_to_maintenance_of_books_of_accounts_under_Income_Tax_law\" title=\"What are the law related to maintenance of books of accounts under Income Tax law? \">What are the law related to maintenance of books of accounts under Income Tax law? <\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-22407\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/images-2.jpg\" alt=\"Books of Accounts &amp; Financial Statements of Company\" width=\"1289\" height=\"722\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Books_of_Accounts_Financial_Statements\"><\/span><span style=\"color: #000080;\">Books of Accounts &amp; <a href=\"https:\/\/carajput.com\/learn\/category\/financial-services.html\">Financial<\/a> Statements<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Every company should prepare and keep its books of accounts and financial statement at the end of every financial year which give a true and fair view of the state of the affairs of the corporation and explains each transaction. The accounts should be maintained on accrual basis and double entry system of accounting.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_Financial_Statement_of_the_company_should_include_%E2%80%93\"><\/span><strong><span style=\"color: #000080;\">The <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.caindelhiindia.com\/blog\/documentation-for-a-startup-before-after-investment\/\">Financial<\/a><\/span> Statement of the company should\u00a0<\/span><\/strong><span style=\"color: #000080;\"><span style=\"font-size: 18.72px;\">include: &#8211;<\/span><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Balance sheet of the company at the end of every financial year.<\/li>\n<li>Cash flow statement of the company for the financial year.<\/li>\n<li>Profit and loss account or income and expenditure account at the end of financial year in case of NPO.<\/li>\n<li>The statement that shows changes in equity in case if imposed<\/li>\n<li>Explanatory note carrying part of any document specified in above all clauses.<\/li>\n<\/ul>\n<p><strong><span style=\"color: #000080;\">According to the Section 2(13) of Companies Act, Books of Account involve records maintained in connection with\u00a0<\/span><\/strong><span style=\"color: #000080;\"><b>these:\u00a0<\/b><\/span><\/p>\n<ul>\n<li>The sum of money received or expanded by a company for which the receipts and expenditure has taken place.<\/li>\n<li>The assets and liabilities of the company.<\/li>\n<li>All sales and purchases of goods and services made by the company during the financial year.<\/li>\n<li>According to the section 148 of the company Act 2013 all the items of cost which belongs to any class of the companies specified under the said section.<\/li>\n<\/ul>\n<p>The word \u201cBook and Paper\u201d and \u201cBook or Paper\u201d is used to describe the books of account, vouchers, debts, minutes, documents, writings, and registers maintained on paper or also in electronic form.<\/p>\n<p>Board of Directors must prepare a Directors Report in the given format and must send it to the shareholders along with<a href=\"https:\/\/carajput.com\/publications\/basic-audit-manual-small-and-medium-enterprises.pdf\"> audited accounts<\/a>.<\/p>\n<p>The financial statements of the company should be prepared before the AGM of the company, and it has to be adopted by the meeting.<\/p>\n<p>Also, all the accounts should be maintained at the registered office<\/p>\n<p>The books of accounts of the company should be maintained at the registered office of the company for every financial year. Also, the board of directors of the company can keep the books of accounts of the company at any other place in India after filing a notice with the Registrar.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-30896\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/accounting-ratio.jpeg\" alt=\"accounting ratio\" width=\"1080\" height=\"1420\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/accounting-ratio.jpeg 1080w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/accounting-ratio-228x300.jpeg 228w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/accounting-ratio-779x1024.jpeg 779w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/accounting-ratio-768x1010.jpeg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/accounting-ratio-800x1052.jpeg 800w\" sizes=\"(max-width: 1080px) 100vw, 1080px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Maintenance_of_books_of_accounts_of_the_company_at_different_Place\"><\/span><span style=\"color: #000080;\">Maintenance of books of accounts of the company at different Place<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Board of Directors should decide to keep the books of accounts of the company at any other place in India. For this a special resolution should be passed in the AGM by the board of directors within 7 days a notice should be filed with the Registrar of Companies in Form AOC-5.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-29162\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/What-is-Prepaid-Deferred-Expense.jpg\" alt=\"What is Prepaid &amp; Deferred Expense\" width=\"893\" height=\"609\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/What-is-Prepaid-Deferred-Expense.jpg 787w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/What-is-Prepaid-Deferred-Expense-300x205.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/What-is-Prepaid-Deferred-Expense-768x524.jpg 768w\" sizes=\"(max-width: 893px) 100vw, 893px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Books_of_Accounts_of_the_company_should_be_kept_in_Electronic_Form\"><\/span><span style=\"color: #000080;\">Books of Accounts of the company should be kept in Electronic Form:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A company can maintain its books of accounts along with all the relevant papers in electronic formation if the company satisfies all the given conditions: &#8211;<\/p>\n<ul>\n<li>Those records that are maintain in electronic formation should be accessible in India.<\/li>\n<li>Records should be maintained completely in its original format without any alteration.<\/li>\n<li>The information should be kept originally without any change or alteration as it was given by the branch office.<\/li>\n<li>Books of Accounts should be kept in readable form.<\/li>\n<li>There should be a proper system for storage, retrieval, display or printout of all the electronic records are in their place and all these records shall not be disposed unless guided by law.<\/li>\n<li>Back-up of all the records and Books of Accounts should keep in servers that are physically located in India periodically.<\/li>\n<li>An intimation should file with Registrar by the company on annually at the time of filing of financial statement regarding the name of the service provider,\n<ul>\n<li>along with the internet protocol address of service provider,<\/li>\n<li>the location of the service provider,<\/li>\n<li>Address of records maintained on cloud, as per the applicability<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-28434\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Classification-of-Account.jpg\" alt=\"Classification of Account\" width=\"1196\" height=\"1257\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Classification-of-Account.jpg 1196w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Classification-of-Account-285x300.jpg 285w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Classification-of-Account-974x1024.jpg 974w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Classification-of-Account-768x807.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Classification-of-Account-800x841.jpg 800w\" sizes=\"(max-width: 1196px) 100vw, 1196px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Company_Annual_Filling\"><\/span><strong><span style=\"color: #000080;\">Company Annual Filling<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Every company which is registered under the Companies Act,2013 should file their annual return with the Registrar of the Company.<\/li>\n<li>The term Annual Filing means the filing of <a href=\"https:\/\/carajput.com\/publications\/basic-audit-manual-small-and-medium-enterprises.pdf\">Audited Annual Financial Accounts of the company<\/a> with Directors Report. Also Annual Return of the company with ROC. These annual filings are necessary for every registered company no matter the company is carrying on the business or not.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Financial_Year_of_a_Company\"><\/span><span style=\"color: #000080;\"><strong>Financial Year of a Company<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The FY of a company starts from 1<sup>st<\/sup> April of a year and end on 31<sup>st<\/sup> March of the relevant year.<\/p>\n<ul>\n<li>However, when a company incorporated on or after 1<sup>st<\/sup> January of a year it has to end its account on 31<sup>st<\/sup> March and financial year of the company should be from 1<sup>st<\/sup> January to 31<sup>st<\/sup> Where the accounts made up of that particular year since incorporation shall be considered.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Different_Financial_Year_than_April_%E2%80%93_March\"><\/span><span style=\"color: #000080;\"><strong>Different Financial Year than April &#8211; March\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The company is a holding company, subsidiary company or an associate of company that is incorporated outside India. In that case the company can adopt a different financial year for the purpose of consolidation of its accounts outside India after getting an approval from the Central Government.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Accounts_of_Branch_Office\"><\/span><span style=\"color: #000080;\"><strong>Accounts of\u00a0Branch Office<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>All the Company that has a branch office in India or Outside India should keep its records at the branch office which are relating to those transactions that effect branch. Also, the branch office should send the summarized returns periodically to its registered office or it may be the office where the books of accounts of the company are maintained.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Inspection_of_Books_of_accounts\"><\/span><span style=\"color: #000080;\"><strong>Inspection of Books of accounts<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The company has to make all its records ready for inspection at registered office of the company or may be the other place in India during business hours which includes all the financial information being maintained outside India. Further, a person who has given legal authority by the respective board of directors through a resolution can inspect the subsidiary company.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How_Preservation_of_Books_of_Accounts\"><\/span><span style=\"color: #000080;\"><strong>How Preservation of Books of Accounts?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The company Needed to preserve all its books of accounts of 8 financial years immediately preceding a financial year and if the existence of the company is for less than 8 years than the records of all the preceding years should be preserved.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs_ON_BOOKS_OF_ACCOUNTS_FINANCIAL_STATEMENTS\"><\/span><span style=\"color: #ff0000;\">FAQ\u2019s ON BOOKS OF ACCOUNTS &amp; FINANCIAL STATEMENTS<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22408\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/FAQs-ON-BOOKS-OF-ACCOUNTS-FINANCIAL-STATEMENTS..jpg\" alt=\"FAQ\u2019s ON BOOKS OF ACCOUNTS &amp; FINANCIAL STATEMENTS\" width=\"1280\" height=\"615\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/FAQs-ON-BOOKS-OF-ACCOUNTS-FINANCIAL-STATEMENTS..jpg 1280w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/FAQs-ON-BOOKS-OF-ACCOUNTS-FINANCIAL-STATEMENTS.-300x144.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/FAQs-ON-BOOKS-OF-ACCOUNTS-FINANCIAL-STATEMENTS.-1024x492.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/FAQs-ON-BOOKS-OF-ACCOUNTS-FINANCIAL-STATEMENTS.-768x369.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/FAQs-ON-BOOKS-OF-ACCOUNTS-FINANCIAL-STATEMENTS.-800x384.jpg 800w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/p>\n<p><span style=\"color: #000080;\"><strong>Q.1: whether the Minutes, Statutory Registers and Records of the Company are need to be maintained for more than eight years or more?<\/strong><\/span><\/p>\n<ul>\n<li>According to the section 128(5) of the companies Act, 2013 every company should maintain its books of accounts for not less than 8 financial years immediately preceding a financial year. Minutes, statutory records are the principal documents of the company that should be maintained preserved since inception.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Q.2: What if a company keep its part of Books of Accounts and other papers in some other place in India other than the registered office of the company?<\/strong><\/span><\/p>\n<ul>\n<li>Yes, a Company can prepare, preserve and maintain the Books of Accounts and other papers of the company at a place other than the Registered Office of the Company after getting the approval from the Board of Directors.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Q.3: What if a company keep its books of accounts and other papers in multiple places in India?<\/strong><\/span><\/p>\n<ul>\n<li>Yes, as per the provisions of the section 128 &amp; rules under the companies Act, 2013, there is no such restriction on a company. A company can keep its accounts at multiple places in India. However, the Board Resolution has clearly specified that such books of accounts should be kept at ROC.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"CASE_STUDY_BASIS_ON_REAL_SITUATION\"><\/span><span style=\"color: #000080;\"><strong>CASE STUDY BASIS ON REAL SITUATION<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><b style=\"color: #000080;\">What is the remedy for a listed company if the shareholder of the company goes to the registered office of the company to inspect the respective documents such as books and <\/b><span style=\"color: #000080;\"><b>papers,<\/b><\/span><b style=\"color: #000080;\"> but the papers are situated at a place other rather than the registered office?<\/b><\/span><\/p>\n<p>According to the section 170 of the Companies Act,2013 every shareholder of the company can inspect the statutory registers and records of the company during the business hours, and he\/she can take the extracts from there along with the copies of the registers. However, if the shareholder of the company visited the registrar office of the company but documents have been kept at any other place in India other than the company shall explain the matter and guide the shareholder about the other place and about the records.<\/p>\n<p class=\"\" data-start=\"0\" data-end=\"145\"><span style=\"color: #000080;\"><strong>What are the comparisons between accounts payable and accounts receivable? . <\/strong><\/span><\/p>\n<p class=\"\" data-start=\"0\" data-end=\"145\"><strong>Summary of the differences between accounts payable and accounts receivable\u00a0<\/strong><\/p>\n<p data-start=\"0\" data-end=\"145\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-29302\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Accounts-Payable-vs-Accounts-Receivable.jpg\" alt=\"Accounts Payable vs Accounts Receivable\" width=\"1017\" height=\"959\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Accounts-Payable-vs-Accounts-Receivable.jpg 1017w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Accounts-Payable-vs-Accounts-Receivable-300x283.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Accounts-Payable-vs-Accounts-Receivable-768x724.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Accounts-Payable-vs-Accounts-Receivable-800x754.jpg 800w\" sizes=\"(max-width: 1017px) 100vw, 1017px\" \/><\/p>\n<div class=\"_tableContainer_16hzy_1\">\n<div class=\"_tableWrapper_16hzy_14 group flex w-fit flex-col-reverse\" tabindex=\"-1\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"147\" data-end=\"3001\">\n<thead data-start=\"147\" data-end=\"406\">\n<tr data-start=\"147\" data-end=\"406\">\n<th data-start=\"147\" data-end=\"177\" data-col-size=\"sm\"><strong data-start=\"149\" data-end=\"164\">Particulars<\/strong><\/th>\n<th data-start=\"177\" data-end=\"290\" data-col-size=\"md\"><strong data-start=\"179\" data-end=\"204\">Accounts Payable (AP)<\/strong><\/th>\n<th data-start=\"290\" data-end=\"406\" data-col-size=\"md\"><strong data-start=\"292\" data-end=\"320\">Accounts Receivable (AR)<\/strong><\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"666\" data-end=\"3001\">\n<tr data-start=\"666\" data-end=\"924\">\n<td data-start=\"666\" data-end=\"695\" data-col-size=\"sm\"><strong data-start=\"668\" data-end=\"679\">Meaning<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"695\" data-end=\"808\">Money the business owes to suppliers\/vendors for goods or services bought on credit<\/td>\n<td data-col-size=\"md\" data-start=\"808\" data-end=\"924\">Money the business expects to receive from customers for goods or services sold on credit<\/td>\n<\/tr>\n<tr data-start=\"925\" data-end=\"1184\">\n<td data-start=\"925\" data-end=\"954\" data-col-size=\"sm\"><strong data-start=\"927\" data-end=\"935\">Type<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"954\" data-end=\"1068\">Liability \u2013 it is an amount the business needs to pay<\/td>\n<td data-col-size=\"md\" data-start=\"1068\" data-end=\"1184\">Asset \u2013 it is an amount the business will receive<\/td>\n<\/tr>\n<tr data-start=\"1185\" data-end=\"1443\">\n<td data-start=\"1185\" data-end=\"1214\" data-col-size=\"sm\"><strong data-start=\"1187\" data-end=\"1205\">When It Arises<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"1214\" data-end=\"1327\">When the company buys goods\/services on credit instead of paying cash immediately<\/td>\n<td data-col-size=\"md\" data-start=\"1327\" data-end=\"1443\">When the company sells goods\/services on credit and allows customers to pay later<\/td>\n<\/tr>\n<tr data-start=\"1444\" data-end=\"1702\">\n<td data-start=\"1444\" data-end=\"1473\" data-col-size=\"sm\"><strong data-start=\"1446\" data-end=\"1463\">Balance Sheet<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"1473\" data-end=\"1586\">Recorded under current liabilities<\/td>\n<td data-col-size=\"md\" data-start=\"1586\" data-end=\"1702\">Recorded under current assets<\/td>\n<\/tr>\n<tr data-start=\"1703\" data-end=\"1961\">\n<td data-start=\"1703\" data-end=\"1732\" data-col-size=\"sm\"><strong data-start=\"1705\" data-end=\"1725\">Cash Flow Impact<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"1732\" data-end=\"1845\">Leads to cash outflow when paid<\/td>\n<td data-col-size=\"md\" data-start=\"1845\" data-end=\"1961\">Leads to cash inflow when collected<\/td>\n<\/tr>\n<tr data-start=\"1962\" data-end=\"2221\">\n<td data-start=\"1962\" data-end=\"1991\" data-col-size=\"sm\"><strong data-start=\"1964\" data-end=\"1984\">Accounting Entry<\/strong><\/td>\n<td data-start=\"1991\" data-end=\"2104\" data-col-size=\"md\">Credited when liability is recorded, debited when paid<\/td>\n<td data-col-size=\"md\" data-start=\"2104\" data-end=\"2221\">Debited when asset is recorded, credited when collected<\/td>\n<\/tr>\n<tr data-start=\"2222\" data-end=\"2480\">\n<td data-start=\"2222\" data-end=\"2251\" data-col-size=\"sm\"><strong data-start=\"2224\" data-end=\"2243\">Management Goal<\/strong><\/td>\n<td data-start=\"2251\" data-end=\"2364\" data-col-size=\"md\">Pay on time to keep suppliers happy and avoid penalties<\/td>\n<td data-col-size=\"md\" data-start=\"2364\" data-end=\"2480\">Collect on time to maintain healthy cash flow and avoid bad debts<\/td>\n<\/tr>\n<tr data-start=\"2481\" data-end=\"2739\">\n<td data-start=\"2481\" data-end=\"2510\" data-col-size=\"sm\"><strong data-start=\"2483\" data-end=\"2509\">Key Documents Involved<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"2510\" data-end=\"2623\">Purchase orders, supplier invoices, goods received notes, payment terms agreed with suppliers<\/td>\n<td data-col-size=\"md\" data-start=\"2623\" data-end=\"2739\">Sales invoices, delivery challans, customer agreements, credit terms for collection<\/td>\n<\/tr>\n<tr data-start=\"2740\" data-end=\"3001\">\n<td data-start=\"2740\" data-end=\"2772\" data-col-size=\"sm\"><strong data-start=\"2742\" data-end=\"2771\">Effect on Working Capital<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"2772\" data-end=\"2884\">Delaying payments temporarily improves cash availability<\/td>\n<td data-col-size=\"md\" data-start=\"2884\" data-end=\"3001\">Outstanding receivables reduce cash availability until collected<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"What_are_the_law_related_to_maintenance_of_books_of_accounts_under_Income_Tax_law\"><\/span><span style=\"color: #000080;\"><strong>What are the law related to maintenance of books of accounts under Income Tax law? <img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-27304\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Books-of-Accounts.jpg\" alt=\"Maintenance of books of accounts under Income Tax law\" width=\"917\" height=\"1280\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Books-of-Accounts.jpg 917w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Books-of-Accounts-215x300.jpg 215w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Books-of-Accounts-734x1024.jpg 734w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Books-of-Accounts-768x1072.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/06\/Books-of-Accounts-800x1117.jpg 800w\" sizes=\"(max-width: 917px) 100vw, 917px\" \/><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"<p>Books of Accounts &amp; Financial Statements Every company should prepare and keep its books of accounts and financial statement at the end of every financial year which give a true and fair view of the state of the affairs of the corporation and explains each transaction. The accounts should be maintained on accrual basis and &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[249],"tags":[5223,676],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22406"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=22406"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22406\/revisions"}],"predecessor-version":[{"id":22412,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22406\/revisions\/22412"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=22406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=22406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=22406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}