Accounting system

This query is : Resolved

sankar ponnan (Querist)
Follow

07 August 2020 Sir
I own trucks out of which some of them are under loan. I am also the director for a company.
I agreed with company for providing my trucks for business use and receiving the hire payment on sub-contract basis.
As per the terms of agreement, I receive the hire payment after adjusting all the expenses made by the company including the repayment of my vehicle loan also.

In books of my accounts, I separated all the expenses by crediting the name of company at the time of payment through a journal voucher.

In books of company accounts, While making payment, It debits the expenses and credits its bank account. At the end of every month, it credits all expenses paid for my trucks and debits my account.

Is it correct system for maintaining of accounts?

guide me plz
thanks in adv

CA KARAN SINGH

CA KARAN SINGH (Expert)
Follow

10 August 2020 The accounting entries passed in the books of accounts of Company is alright.
Otherwise, the company can debit the account of the director at every payment made on his behalf instead of debiting at month-end against all expenses incurred on his behalf.

The net effect of both types of entries will be the same. But to improve the presentation second option is better.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now