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CMA Intermediate · Financial Accounting · Accounting of Limited Liability Partnership

Which statement about books of account of an LLP is correct under Section 34 of the LLP Act, 2008?

An LLP must maintain proper books of account for each year on either cash basis or accrual basis, and according to the double entry system of accounting, kept at its registered office, as Section 34(1) of the LLP Act, 2008 provides.

  1. ABooks may be kept on cash basis or accrual basis, using the double entry systemCorrect
  2. BBooks must be kept only on cash basis using single entry
  3. CBooks must be kept only on accrual basis, and the double entry system is optional
  4. DBooks need not be kept if the LLP's turnover is low

Explanation

Section 34(1) requires proper books for each year of existence on cash basis or accrual basis and according to the double entry system. Hence the accrual-only and single-entry options are wrong, and no turnover-based exemption from keeping books appears there.

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