Harisharna had started a new mid sized business .He being new to accounting sought advice from a chartered accountatnt on manntenance of accounts.He was advised that he should follow Double Entrysystem of acconting maintaining acconts on accrual basis .Some of his friends advised him to maintain accounts on cash basis of accounting.HGe decided to follow the advice of the chartered accountatnt you have to appraise judge and justify whether the decision of shri hariharn is correct

Harisharna had started a new mid sized business .He being new to accou

1.	Harisharna had started a new mid sized business .He being new to accounting sought advice from a chartered accountatnt on manntenance of accounts.He was advised that he should follow Double Entrysystem of acconting maintaining acconts on accrual basis .Some of his friends advised him to maintain accounts on cash basis of accounting.HGe decided to follow the advice of the chartered accountatnt you have to appraise judge and justify whether the decision of shri hariharn is correct
Answer» <html><body><p></p>Solution :The decision of <a href="https://interviewquestions.tuteehub.com/tag/hariharan-482523" style="font-weight:bold;" target="_blank" title="Click to know more about HARIHARAN">HARIHARAN</a> to maintain accounts on double entry system of accounting <a href="https://interviewquestions.tuteehub.com/tag/following-463335" style="font-weight:bold;" target="_blank" title="Click to know more about FOLLOWING">FOLLOWING</a> accrual concept is <a href="https://interviewquestions.tuteehub.com/tag/correct-409949" style="font-weight:bold;" target="_blank" title="Click to know more about CORRECT">CORRECT</a> because when account are maintaine on accrual based double entry system of accounting , coorect income expenditure, liabiliteis and assets are shown in the financial statements. Itis <a href="https://interviewquestions.tuteehub.com/tag/important-1038039" style="font-weight:bold;" target="_blank" title="Click to know more about IMPORTANT">IMPORTANT</a> to know the correct income, expenditrue, liabliiteis and assets as it enables the businessman to plan his finances .Had he followed cahs basis of accounting the business would not have shown correct financial performance and financial position as credit transactions would not have been recorded</body></html>

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