Finalizaion of accounts

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This discussion explains the process of finalising accounts, with a specific focus on tax implications. It details how to calculate tax on profits and make the necessary entries in the Profit & Loss account and balance sheet. The advice suggests creating a 'Provision for Tax' account before finalising the P&L, crediting it when tax is due, without altering the P&L account itself.

Atul Nagarkar

Atul Nagarkar (Querist)

19 July 2022 I want to kbow about finalization accouts. Which entry will be done .
Please explain in detailed .
Then how to count tax . How to do entry of tax in finalisation entry.
Thaank you.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

19 July 2022 Refer:: 1. https://taxguru.in/chartered-accountant/steps-time-finalization-books-accounts.html

2. https://www.vedantu.com/commerce/finalization-of-accounts

Atul Nagarkar

Atul Nagarkar (Querist)

19 July 2022 But i want to know about tax on profit, its entry for any firm or company how to calcutae and it entry on profitloss and balance sheet .calculation of tax and after deposit of tax still any other pending the account entry pending or not.
Please suggest me.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

20 July 2022 Make 'Provision for Tax' acc. before finalization of P&L acc. Whenever any tax need to be paid, its credited to the provision for tax acc. No change occurs in P&L acc.

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