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cash basis accounting and cash injection

How to account for cash injection in a cash basis accounting?

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A sole-trader transfers money from a personal/joined bank account to business account.

How to account for this in cash basis system where there is only income and expenditure?

Thank you in advance

Replies (7)

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Scalloway Castle
By scalloway
17th Jun 2021 08:48

A cash injection does not get shown in the P & L. It is treated the same as under accrual accounting. It is a Balance Sheet item

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By Duggimon
17th Jun 2021 08:59

If you don't have a balance sheet then it doesn't go anywhere, you just don't put it in.

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Replying to Duggimon:
By Tax Dragon
17th Jun 2021 09:29

Same when taking money out of the business.

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Replying to Tax Dragon:
By Roca
17th Jun 2021 18:52

Thank you Duggimon and Tax Dragon!

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By lionofludesch
17th Jun 2021 10:35

I'm struggling with the concept of a balance sheet under cash accounting.

Surely the only entry would be cash.

To be fair, I've always struggled with the concept of cash accounting.

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Replying to lionofludesch:
A Putey FACA
By Arthur Putey
17th Jun 2021 12:44

I know what you mean, in its purest form it is a cash register. Any business with debtors and creditors other than for taxes arising from the cash transactions shouldn't be using it, except in the context of VAT if they are registered.

Also for most s/e businesses balance sheets are pointless.

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Replying to Arthur Putey:
By Paul Crowley
17th Jun 2021 19:03

They will soon be relevant
Bounce Back loans for the self employed
Interest thereon

I was looking to start a thread on that exact issue

I also do not bother with Balance sheets on most small traders. VAT is usually the deciding factor.

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