Is Chit an Asset or Liability?

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Dear Sir,

Thanks for your lessons. I am a non accounting employee but by your material, I have learnt accounting and Tally. ERP 9 and now details with accounts.

My question is that chit ( just like Shriam chits in india ) is a liability or asset group? First month chit we pay 10,000 rps ( one lakh chit ) and by luck when we take the chit in second month for 30,000 deduction and how to account this loss etc.

My doubt chit is an asset or liability. How to make the ledgers for chit and group for my above problem.

Thanks & regards sir.

Rahaman khan from Kuwait

Dear Rahaman Khan! This is good question. As per accounting, to invest money in the Chit fund is your asset because you want to get benefit from this. You get money through winning prize. You can also take loan on your chit fund. There may be some provision of chit control which you have to follow. If you will not follow, your investment will become your loss. Company or organisation who get money from you under chit will be liable to pay your fund as per chit contract's rules and regulation. So, it is the liability of them.

Comments

: 3

RAJApril 28, 2018 at 4:19 PM
SO IN WHICH ENTRY IT COMES. IN TALLY CURRENT LIABILITY OR SOMETHING ELSE ?
MytaxspaceMay 22, 2018 at 4:57 PM
from the point of view of chit company chitty is a liability, and the company do get commission from the chitty.

in case of auctioned
due from prized chittals A/c
To commission
" dividend payable on chitts
" chit disbursement due to prized chittal
UnknownJuly 25, 2018 at 12:02 AM
In case of auctioned we received money from chit fund company after deducting commission and loss amount then what journal entry passed ???Please reply