Basis for opening capital balance
On what basis should the opening capital Account balance be, if after 5 years of business, 1st time a Balance Sheet is prepared.??
Capital means Assets-Liabilities, so go with this concept for last 5 years. Take assets & liabilities for last 5 years. The best way to arrive at the capital balance is to prepare the accounts for last 5 years.
Thank you for your reply.Assesse is not having any asset except some cash, stock and Furniture ofcourse.and none liability.
He has filed ITRs for last two years, so I have just added the assumed profit for 1st 3 years and taxable income of last 2 years to arrive at the opening capital balance after deducting the assumed withdrawals..
@ CA Rohan,
That seems to be a perfect move. It is not compulsory to file return to make statement of Affiars. For withdrawls scrutinize bank statement. Sometime bank withdrawls including card purchases are more than actuals disclosed.