P&l a/c
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 October 2012
Dear Sir,
Suppose, salary paid to employee Rs. 10000/- per month, however the salary of March 2012 was paid in the month of April 2012. If the assessee opts marcantile system, then he should put Rs. 110000/- in his p&l a/c and rest Rs. 10000/- put in the liability side of balance sheet
or
he should put whole Rs. 120000/- in P&L a/c and also put Rs. 10000/- in liability side of balance sheet.
Please advise me, which way is right.
Suppose, salary paid to employee Rs. 10000/- per month, however the salary of March 2012 was paid in the month of April 2012. If the assessee opts marcantile system, then he should put Rs. 110000/- in his p&l a/c and rest Rs. 10000/- put in the liability side of balance sheet
or
he should put whole Rs. 120000/- in P&L a/c and also put Rs. 10000/- in liability side of balance sheet.
Please advise me, which way is right.
26 October 2012
Mercantile system is accruing the income & expenses as and when they incurred, so March Salary has to be accounted as expenses and debit in P&L and show as liability under balance sheet also. your second way is right
27 October 2012
First try to understand the meaning of Mercantile System. This means all expenses whether incurred or not but have become due for payable either during the year or next year. So you have to include full 12 month's salary and provide for 1 month's salary as liability
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