22 December 2011
In a company, while going through entries for the current year, it is found that many expenses related to the previous yeari.e. march2011 is entered in the current year . Reason given is that the bill was not received in the last year . No provision for these expenses in the last year is made in books.
what should the accounting be done for these expenses. tank you.
23 December 2011
As per Accounting standard -5 on Prior period items as issued by ICAI, " Prior period items are normally included in the determination of net profit or loss for the current period. An alternative approach is to show such items in the statement of profit or loss after determination of current net profit or loss. In either case the objective is to indicate the effect of such items on the current profit or loss."
As far as PL as per Income Tax is concerned, you need not do anything and have to book such expense in these year books.
however as far as company books are concerned AS 5 should be followed and have to specifically indicate such expense in p/l account and have to show effect of such expense in current year profit.
CAclubindia
