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CMA Intermediate · Business Laws and Ethics · Limited Liability Partnership Act, 2008

Which statement about the books of account of an LLP is correct as per the Act?

An LLP may keep its books on either cash basis or accrual basis, but they must follow the double entry system of accounting. They are maintained at the registered office for the prescribed period, as required by the Act.

  1. AThey must be kept on cash basis only, using single entry
  2. BThey may be kept on cash or accrual basis, under the double entry systemCorrect
  3. CThey must be kept on accrual basis only, in any system
  4. DThey need be kept only if turnover is above a prescribed limit

Explanation

Section 34(1) says proper books relating to each year of existence are maintained on cash basis or accrual basis and according to double entry system. They are kept at the registered office for the prescribed period. Hence the option with a choice of basis and double entry is right.

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