How Recovery of Loans reduce the …
CBSE, JEE, NEET, CUET
Question Bank, Mock Tests, Exam Papers
NCERT Solutions, Sample Papers, Notes, Videos
Posted by Amit Kumar 6 years, 6 months ago
- 1 answers
Test
Related Questions
Posted by Rijum Karlo 1 year, 4 months ago
- 0 answers
Posted by Mehar Ansari 1 year, 5 months ago
- 0 answers
Posted by Niyati Garg 1 year, 4 months ago
- 0 answers
Posted by Nandita Sharma 1 year, 5 months ago
- 1 answers
Posted by Dipika Sharma 1 year, 4 months ago
- 0 answers
Posted by Shruti Singh 1 year, 5 months ago
- 0 answers
Posted by Naman Jain 1 year, 4 months ago
- 1 answers
myCBSEguide
Trusted by 1 Crore+ Students
Test Generator
Create papers online. It's FREE.
CUET Mock Tests
75,000+ questions to practice only on myCBSEguide app
Yogita Ingle 6 years, 6 months ago
Government advances loans to other governments and economic entities. These economic entities who take loans are debtors (assets) for the government. So, such loans are recorded on the assets side of the balance sheet of government. At the time of recovering the loan, than the balance of loan that has been recorded on the assets side is reduced. So, we say recovery of loans reduces government's assets.
But on the other hand, the fall in the balance of debtors (loan) leads to simultaneous rise in the cash flows to the government (as loans are getting converted into cash**). Thus, in literal sense, we can say that recovery of loans reduces assets but in actual accounting sense, it is not affecting the net value of assets.
1Thank You