Provision for expenses
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 August 2013
In the case of an Individual to whom tax audit is applicable :
A petty expense of Rs.250 for payment to sweeper (in cash) is recorded on payment basis.Hence expense of last year march was recorded in current year. However, all other expenses were recorded on mercantile system.
Is such a system of following partial cash and partial mercantile system allowed?
Also, what should be done for Exp of current year march month?
A petty expense of Rs.250 for payment to sweeper (in cash) is recorded on payment basis.Hence expense of last year march was recorded in current year. However, all other expenses were recorded on mercantile system.
Is such a system of following partial cash and partial mercantile system allowed?
Also, what should be done for Exp of current year march month?
19 August 2013
You are not following accounting principles consistently and as per sec 145A of income tax only mercantile system should be followed.
The current system of accounting followed by you is not correct.Follow only mercantile system of accounting.
you should book expenses on accrual basis and in march only make a provision of such exp to be paid in april.
The current system of accounting followed by you is not correct.Follow only mercantile system of accounting.
you should book expenses on accrual basis and in march only make a provision of such exp to be paid in april.
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