I work in a Private limited Manufacturing company. What I am perplexed about is this that directors sometimes withdraw cash from Company for their personal use. How do I account for such transactions?
niloy sanyal (account manager) (777 Points)
05 August 2015I work in a Private limited Manufacturing company. What I am perplexed about is this that directors sometimes withdraw cash from Company for their personal use. How do I account for such transactions?
ROSHAN PAUL JOSEPH
(CA Final student)
(311 Points)
Replied 05 August 2015
Director Mr. X A/c Dr.
To Cash / Bank
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 05 August 2015
You cannot debit personal expense of directors to company account since same is prohibited under Companies Act as well as Income Tax Act. You will have to debit this amount to director's personal account, which will amount to loan to directors and Sec.185 of CA 2013 will get attracted. You have to check compliance of the same keeping in view conditional exemption given in notification dated 5.6.2015 for private companies.
Thiyagarajan Kandasamy
(Manager Accounts)
(208 Points)
Replied 05 August 2015
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