My doubt is regarding few expenses that were supposed to be given effect in the previous year as outstanding expenses, like telephone bill..but they wer not shown in the prev accounts. In this case when the payment is made in this current year, should we show it as prior period income or Current year expenditure?? Hope to get a reply asap.. Thanks for the reply in advance..
10 May 2011
As per AS-5, prior period items are income/(expenses) that have arisen due to omission or error of the previous year or earlier years. Thus, this should be treated as prior period expenses, since this expenses occurred in the previous year although paid in the current year.
CAclubindia
