Expense
This query is : Resolved
02 December 2014
How to treat expense paid for previous years in Books of current year
02 December 2014
earlier u must have passed entry as:
exp a/c......
to provision for exp a/c
so this year when u make a payment u need to book this entry:
provision for exp a/c......dr
to cash / bank a/c
exp a/c......
to provision for exp a/c
so this year when u make a payment u need to book this entry:
provision for exp a/c......dr
to cash / bank a/c
03 December 2014
It should be booked under the head of prior period expenses, if no provision has been made earlier. And the same should be disallowed under income tax act.
03 December 2014
prior period exp comes only when there is a discovery of mistake or error in item of profit or loss.
if in current year as a result of mistake in preparation of financial statments in one or more of previous year.
if in current year as a result of mistake in preparation of financial statments in one or more of previous year.
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