Provision entry
This query is : Resolved
08 July 2015
My Query is:-
At the end of a financial year if any of expenses are outstanding(For Example Rent) then which of the following entry is correct?
1. Rent A/c
To Creditor A/c
2. Rent A/c
To Provision for Expenses A/c
Please also explain me when do we credit creditors account and when is provision for expenses account has to be credited at the year end.
At the end of a financial year if any of expenses are outstanding(For Example Rent) then which of the following entry is correct?
1. Rent A/c
To Creditor A/c
2. Rent A/c
To Provision for Expenses A/c
Please also explain me when do we credit creditors account and when is provision for expenses account has to be credited at the year end.
09 July 2015
The booking of rent expense is done on monthly basis as per the lease deed and in most of the cases no Bill is being issued by land lord. Under mercandile system rent is to be booked periodically so the entry:-
Rent Dr
To Creditor Cr
Should be passed.
Creditors should be booked when the bill has been received by 31st March and provision should be credited when services/goods has been consumed in March but Bill is date April , in such cases since no bill has been received till march though services has been received a provision need to be created for the expenses.
Rent Dr
To Creditor Cr
Should be passed.
Creditors should be booked when the bill has been received by 31st March and provision should be credited when services/goods has been consumed in March but Bill is date April , in such cases since no bill has been received till march though services has been received a provision need to be created for the expenses.
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