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Is reversal entry permitted

CA Surya Sekar (CFO ) (1347 Points)

18 June 2022

Hi,

Is reversal entries in accounts permitted under companies act instead of deleting or modifying an accounting entry ?

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Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

Yes. It is your discretion to give effect to the transaction

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CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

Is it permitted under companies act ?

4 Like

Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

Companies Act has not specified such reversal of transactions. But you can follow you can follow your own internal control mechanism

3 Like

CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

So it is not wrong to reverse a wrong transaction and pass the correct entry

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Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

Few accounting ERPs don't allow to modify or delete the accounting entry. So there is no wrong in doing so

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CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

But no where in companies act specify about reversal of transactions

Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

You can treat it as generally accepted accounting policies/ principles.

That might be your internal control

1 Like

CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

When we know it is wrong then why we have to reverse it instead of modifying it

1 Like

Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

You may ask this to your employer: top management

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CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

Why they have not given option to modiy or delete the accounting entry ?

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Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

We will not be knowing what is happening in your company and why it is happening. Better discuss with your internal depts

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CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

So that means it is not as per companies act . There might be other motive

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Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 18 June 2022

Possibility is there

CA Surya Sekar (CFO ) (1347 Points)
Replied 18 June 2022

But I have asked all staff they said that they don't know and programmer has designed it

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Is reversal entry permitted

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