Accounting system

A doctor running a private hospital.but accounting records maintained cash system or mercantile system is correct method and difference between cash and mercantile system.

Hi @Sundaraiah_Kollipara

The Income Tax Act permits both the methods of accounting i.e mercantile (accrual) and cash.

Under the mercantile method, income and expenses are accounted as and when the right to receive or the right to pay arises. Under the cash method, income and expenses are accounted on actual receipt or payment.

For three heads of income i.e salary, income from house property, and capital gains only the mercantile method of accounting is permitted.

For profits or gains from business or profession or income from other sources you can use any one of the method.

Hope this helps!