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Journal voucher(JV) & Bank payment voucher(BPV)

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This query is : Resolved

pkkapoor (Querist)

20 October 2010 We are very often giving advance to our employees. At the time of settlement, we pass journal voucher for book adjustment. Like if an amount of Rs. 5000 has been given as advance and he has incurred expenditure of Rs.5500. JV is passed accordingly debiting the expenditure head for Rs. 5500 and crediting staff advance for Rs. 5000 and crediting bank account for Rs. 500. A cheque is acordingly drawn in favour of employee for Rs. 500.
In this connection my query is:

(i)Is is proper to make payment through JV?
(ii)Should we make a JV for staff adjustment and a Bank Payment voucher for payment of Rs. 500?
(iii)If we continue to follow the existing will there be any audit objection?.
THANKS IN ADVANCE!

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)

22 October 2010 Your (ii) is correct always creat a liability and make the payment , Donot pass any JV in bank a/c.

Auditor may advise you to follow the above, but not qualify the report.

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