Expenses

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student (Querist)
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02 May 2016 Q1. Expenses in a firm should not exceed 20,000.Is this applicable to interest to partners as well?

Q2. How to add net profit in balance sheet in tally?which entry to be made?

CA Himanshu Ojha

CA Himanshu Ojha (Expert)
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02 May 2016 1) There is no such rule which limits the expenses of the firm to only Rs. 20,000/-. Section 40A (3)(a) of the Income-tax Act, 1961 provides that any expenditure incurred in respect of which payment is made in a sum exceeding Rs.20,000 /- otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft, shall not be allowed as a deduction.
So you can pay by Cheque. The payment of interest to a partner should not exceed the amount calculated @12%p.a simple interest.

2)I'm assuming from your question that you are maintaining Firm's account in the tally.
For transferring the Profit to the capital A/c of the partners, pass this entry -
Profit & Loss Acc. Dr xxxx
To Capital Account xxxx

Hope this clarifies your doubt.

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Rupesh Jain

Rupesh Jain (Expert)
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02 May 2016 rule for you cannot pay the exp in cash exceeds rs. 20000/- mostly partner ship firm give the intt at the end of the year. and credited in capital a/c.
For profit you pass the entry in tally
Profit & loss a/c Dr.
to capital a/c

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