provision
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 August 2010
what is provision for Interst,Tax etc,& why should it is created, kindly show me the Entry also
Regards
Regards
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)
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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