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Thread: Accounting And Auditing Practices - Volume - 1 - Query - 1.14 - Distinction between “Sundry Creditors” and “other Liabilities”.

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    BARE ACT
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    Thumbs up Accounting And Auditing Practices - Volume - 1 - Query - 1.14 - Distinction between “Sundry Creditors” and “other Liabilities”.

    1.14 - Query

    Distinction between “Sundry Creditors” and “other
    Liabilities”.

    Under the Companies Act, the liabilities will have to be exhibited in the Balance Sheet either under “Sundry Creditors” or “Other Liabilities”. From the inception of the composite Corporation in the year 1957, we have been exhibiting under “Sundry Creditors” the outstanding liabilities, at the close of the year, in respect of the goods supplied or services rendered, whether the same have been credited to the personal accounts or other accounts. All moneys held in trust which are either refundable or adjustable, were being exhibited under “Other Liabilities”.

    During the course of audit of the Corporation’s accounts for the financial year 1965-66 some of its regional auditors (Chartered Accountants) have not agreed with the above classification and suggested that the credit balance outstanding in the personal accounts should alone be exhibited as “Sundry Creditors” and all other credit balances (other than the parties account) should be grouped and shown under “Other Liabilities”.

    Four firms of Chartered Accountants are auditors of the Corporation and they are divided in their opinions on the two procedures stated above. The views of the esteemed Institute are sought for guidance.




    Opinion

    August 29, 1967

    In the opinion of the Committee, for the purpose of making a distinction between “Sundry Creditors” and “Other Liabilities” there is need to refer back to the provisions of the Indian Companies Act, 1913. It is not possible to make a distinction between “Sundry Creditors” and “Other Liabilities” on the basis of accounting practices or principles. Under the circumstances, the Committee would advise that “Sundry Creditors” may be interpreted to include all liabilities arising out of the trading activities of the company viz., purchase of goods, materials and services, and any other liabilities not so arising may fall under the residuary head.
    Last edited by BARE ACT; 13-08-2010 at 11:21 AM.

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