17 January 2012
Sir, What's the appropriate way or rectification entry to be made for the error made in the previous year. These are the original entries passed in the books of the company,
a)Expense booked in the previous year, [ie, on 31/03/11 (FY-2010-11)] Expense A/c Dr 1104 To Party A/c 1104 [liability being booked in march(service tax wrongly included in expense)]
b)Payment made in April (FY-2011-12) Party A/c Dr 1000 Service Tax A/c Dr 104 (paid on input services) To Bank/Cash 1104 (payment made and service tax paid on input services booked)
is the following rectification entry apt?
Party A/c Dr 104 To Prior Period Expense 104 (rectification entry for the excess booking of expense and liability in the previous year)
CAclubindia
