JERRY JOHN (60 Points)
12 June 2017I have started a consultancy business recently. Since I do not have a current account account, I incurred business expenses from Saving Account by Cheque/Net Transfer. Can anybody help me as to how to account these expenses in books of accounts of the business and the accounting entries for the same.
rocky
(accountant)
(947 Points)
Replied 12 June 2017
Jai Prakash Singh
(Sr Accountant)
(40 Points)
Replied 14 June 2017
no problem. you can use saving account in a business. but if you will do cash transactions more than 10 lakh in a year, you may get notice from IT department . IN NEXT FINANCIAL YEAR IN DAY FIRST START YOU CAN OPEN CURRENT ACCOUNT AND RUN CONTINUE...
Jai Prakash Singh
(Sr Accountant)
(40 Points)
Replied 14 June 2017
no problem. you can use saving account in a business. but if you will do cash transactions more than 10 lakh in a year, you may get notice from IT department . IN NEXT FINANCIAL YEAR IN DAY FIRST START YOU CAN OPEN CURRENT ACCOUNT AND RUN CONTINUE...
Mohamed Rashid T
(11 Points)
Replied 15 June 2017
Assuming you are runnning a proprietorship organisation, There is no issue in showing the personal Bank account int your books( Except issues with bank and IT notices). You have 2 options
1. Do not show Bank account in books and use entries in the following manner.
Expense/Asset A/c Dr xxxx
Capital A/c Dr xxxx
To Capital A/c xxxx
To Income/Liability xxxx
2. Show bank account in Books and account personal transactions as drawings/additions as appropriate.
In my Opinion Option 2 is better as it helps in proper calculation of income Tax
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