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Accounting procedures

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This query is : Resolved

SUSHANT (Querist)

21 December 2010
I am doing one of internal audit where i found that cash advance is reversed for the purpose of settlement and new entry passed for the expenses entry. so advance and reverse get cancelled and new entry came in place.

if this is ok please answer the following

1 is it needed to make receipt entry of cash while reversing ?
because the entry is cash -----dr
to advance
2.i have doubt that he practically not receiving the amount of 20000 but passing entry as cash ------dr
to advance
3 what is the effect of this. which is not
practically correct.

is the accounting is wrong or not
what is the correct entry to be made for settlement as universally accepted.

just help me on this line.

CA Anisha Ray

CA Anisha Ray (Expert)

22 December 2010 You could pass the following entry :-

Expense A/c ....Dr
To Advance A/c

In case some portion is received back in cash

Expense A/c...Dr
Cash / Bank A/c...Dr
To Advance A/c

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