prior period exp

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 February 2011 Dear sir,

I have a doubt regarding prior period expenditure. Our company's director gone to a foreign country for marketing our products and we have given an advance to him in the month of march 2010(in first week) and he returned to India in 2nd week of May and submitted the bills in the June and most of the expenditure is related to March. whether our company is required to provide any provision for the advance given to him in 09-10 or we directly book the expenditure in 10-11 as travel expenses or as prior period exp

Please advice

Thank you sir

B. Gopalkrishna Baliga

B. Gopalkrishna Baliga (Expert)
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04 February 2011 ideally, entry for Payment for advance for foreign traveling should be passed. Because the expenses bills were submitted to you after closure of the year, in the next years' accounts, you can debit Prior year expenses and credit advance for traveling account

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Querist : Anonymous

Querist : Anonymous (Querist)

05 February 2011 Thank you sir,

But as per income tax act prior period expenditure is disallowed. to avoid this, are we require to create a provision for advance given in the books.

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