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provision

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Querist : Anonymous

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Querist : Anonymous (Querist)
09 August 2010 what is provision for Interst,Tax etc,& why should it is created, kindly show me the Entry also
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CA. BIJENDER KR. BANSAL

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CA. BIJENDER KR. BANSAL (Expert)
09 August 2010 IF ACCOUNTS ARE MAINTAINED MERCANTILE SYSTEM, THEN EXPENSES AND INCOME ARE BOOKED ON DUE AND ACCURAL BASIC.
IE EXPENSES DUE BUT NOT PAID , INTEREST ACCURED BUT NOT RECD.

HENCE PROVISION FOR INTERST : IF INTERST IS TO BE PAID TO BANK BUT NOT DEBITED BY BANK THEN INTERST PROVISION IS MADE.


PROVISION FOR TAX : TAX LIABLITY IS FOR THAT FINANCIAL YEAR FOR WHICH WE ARE PREPARING BALANCE SHEETS , ON 31ST MARCH WE MADE PROVISION FOR TAX WHICH IS TO BE PAID AS SELF ASSESSMENT AFTER 31ST MARCH ITSLEF.


fOR INTERST DUE/

Interst on Loan (Profit & loss ) dr

to Provision for interst

2. for Tax
Income tax (Profit & loss) Dr
To Provision for Taxation

3.For interst accured but not recd

Interest accured but not recd (Current asset ) Dr
to Interest accured (profit & loss ac)
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