Prepare Dummy Balance sheet profit and loss in case of loan/ITR

Basically you have to consider the following points

  1. Sales and profit should be exact same as mentioned in ITR
  2. Sales Turnover should match with GST Returns
    (For FY 2017-18,3 months (apr-june),we need to take Vat/Service tax /Excise Turnover and Remaining GST Turnover)
    If party is unregistered,Sales should be less than GST limit of 20 lacs
  3. Closing stock of PL and BS Should match
  4. Profit of the year should be added in Capital of Proprietor
  5. Dep in P&l and Fixed assets in Balance sheet should tally. Use dep as per income tax act.
  6. No loan taken or given should be normally shown (however if there is genuine loan,take exact figure as on 31 march as per loan statement)
  7. Stock figures depends upon business.
    Some business do not have stock like Service Sector.
    Some have very less stock like Restaurant business
    Some have high stock levels 3-4 months of sales like retailers or whole sellers
  8. Debtor Creditors figures depends upon business
    Some business do not have debtors like Restaurant business which make cash sales
    Some have very high debtors like 3-4 months of sales like retailers or whole sellers
    Also those following cash basis of accounting do not have debtors and creditors
  9. Avoid using Round figures,Instead of putting sales as 1000000,you can show it as 984254 which looks more realistic
  10. Assets shown should be as per business
    For those in transport business,there will be good amount of trucks
    For CA,there will be laptops and printers
    for all business,there will be computers and mobile phones and furniture and fixtures
  11. Bank balance should be exact as per Bank Statement.
  12. Cash Balance sheet should not be too high max 10-15 days of sales)
  13. If we are preparing for more than 1 year Ensure that Closing Capital,Fixed Assets and Stock of first year is Opening of Next year. There is not too much fluctuation in Sales and profit (10 to 20% increase) GP Ratio of both years should be similar(not exact but similar)

if we will have loan in future years,show closing balance of loan which will be there at end of next year

 

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  1. Practical Income Tax
  2. Important Changes in Income Tax 2017-18
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CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .