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tentative-balance-sheet

Question BankCategory: Income Taxtentative-balance-sheet
ANIL SIR asked 1 year ago

For how many months tentative balance sheet is valid ?

1 Answers
Rashmi answered 1 year ago

Balance sheet is generally prepared to show balance of assets and liabilities after the end of the accounting period. Balance Sheet is not for the period, but it is “As on” status of assets & liabilities of a firm on a certain date. like Balance sheet of XYZ ltd as on 31.3.2022.
When balance sheet is prepared “As on a specific past date” before the end of accounting period, for any specific requirement like bank loan or any other requirement, and figures & balances shown are actual as per books of accounts then it is called Provisional Balance sheet. For example if today is 3-12-2022 and if we are preparing balance sheet of XYZ as on 30.11.2022 then it is provisional balance sheet. 
When balance sheet is prepared for a future date for any specific purpose like project report, bank loan or others, then figures & balances shown in this balance sheet are projected / tentative. Hence this is called Projected or Tentative Balance Sheet. For example, if today is 3rd December 2022 and if we prepared balance sheet of XYZ ltd as on 31.3.2023 then it is projected / tentative balance sheet. 
Validity of projected/tentative balance sheet. :- Figures and Balances of projected balance sheet is not actual, and these figures and balances may be revised with every next closing of book of accounts at the end of each quarter. There is no fixed validity period for any projected or tentative balance sheet. For example, if today on 3-12-2022, if we prepare projected balance sheet of XYZ ltd as on 31.3.2023 then it may be revised after quarterly closing of 31.12.2022. Your bank may ask to submit revised Projected /tentative balance sheet after end of each quarter. Hence validity of such projected/ tentative balance sheet may be considered from 1 day to 3 months depending upon the time till next closing, but your bank may ask you to revise the projected/tentative balance sheet before that. 
 

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