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CBSE Class 12-commerce Answered

In this question, why investment is shown in the opening balance sheet?
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Asked by ravimundrakd | 06 Apr, 2020, 07:46: PM
answered-by-expert Expert Answer
In the given Receipts and Payments Account, Interest on Investments is given for full year, which means the Investments were owned by the organisation from the first day of the accounting year till the last day of that accounting year. This is possible in 2 cases:
  • if investments are brought forward from the preceding year and held till the end of current year;
  • if the investment was purchased on the first day of the accounting year and held till the end of current year.
Since, no information is given for Investments being purchased on the first day of the accounting year, it is very evident that the Investment is brought forward from the preceding accounting year. Therefore, such Investment will appear in the closing balance sheet of the preeceeding accounting year which becomes the opening balance sheet for the current accounting year.
Answered by Surabhi Gawade | 07 Apr, 2020, 09:51: AM

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