Booking of exp under wrong head
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 March 2013
can any tell me what happens if a company books any exp under the incorrect head?
Dintakurthi Tirumala
(Expert)
26 March 2013
It will not be effect. If the both expenditure heads i.e actual head and debited head both are same nature and allowable as expenditure. However you can pass rectification entry by passing journal voucher by debiting the correct head and crediting the wrong head to correct the mistake by getting proper authorigy authorisation.
For example any payments related to incometax doesn't allowed as expenditure while computing taxable income but misslenouse expenses will allowable as expenditure.
So if you by mistake debit to Misslenouse expenditure instead of income tax payment account then it will be make problem you at the time of finding out. As well as in case in the reverse case i.e debited to TDS account instead of misslenouse account then company will loose the tax benefit because of expenditure not considered for deduction.
So the both hands have different nature for tax treatment and considering profit & loss then it will make problem to you otherwise no problem will arise.
So if there is chance to rectify pass the rectification entries and correct the statements with proper authorisation.
OM SAI SRI SAI JAI JAI SAI
For example any payments related to incometax doesn't allowed as expenditure while computing taxable income but misslenouse expenses will allowable as expenditure.
So if you by mistake debit to Misslenouse expenditure instead of income tax payment account then it will be make problem you at the time of finding out. As well as in case in the reverse case i.e debited to TDS account instead of misslenouse account then company will loose the tax benefit because of expenditure not considered for deduction.
So the both hands have different nature for tax treatment and considering profit & loss then it will make problem to you otherwise no problem will arise.
So if there is chance to rectify pass the rectification entries and correct the statements with proper authorisation.
OM SAI SRI SAI JAI JAI SAI
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