can director of pvt ltd co issue cheque fom personal a/c

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chirag (Querist)

22 October 2010 hello everyone

its urgent,,

In newly incorporated private limited company can directors can issue cheques(from his personal bank a/c) for advance payments to suppliers of machinery where bank account of the company is not opened and payment is very urgent due to time constraint..

now plz,,guide me that is it possible or not or any other way out,,, also the right accounting treatment for the same...

plz its urgent

thanks in advance

B R Ramesh

B R Ramesh (Expert)

23 October 2010 Hi

under companies act of 1956 issuing a chq from the personal account of the director is allowed.

you can book the expnditure in your company books of accounts as preliminary or Pre operative expenses under MISC assets.

after the end of the year you can write of the expenses 1/5th ratio.

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Abhay Gujarathi

Abhay Gujarathi (Expert)

23 October 2010 Yes possible. It is consider to be unsecured loan.. and it should be capitalised is exps directly related to pur of machi.. and if it is prelimery exps then total amt should be charged to p&L and not 1/5th.. it is as per AS-26

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chirag

chirag (Querist)

23 October 2010 thanks for your valuable replies..

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