Writing-off expenses

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anthony (Querist)
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26 January 2009 How do you write-off expenses. For Eg., expenses incurred in the year 2005 & 2006. Audit is done in the financial year 2008. Can these expenses incurred in 2005 & 2006 be writen-off in the financial year 2008. If YES, what is the procedure and what journal entries to be passed? Also, what is the impact on Balance Sheet and P & L Account? OR How does it affects BS and P&L account?

Thanks

Deepak Agrawal

Deepak Agrawal (Expert)
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26 January 2009 Yes it can be written off... If it was not written-off by-mistake in earlier years, then it should be shown under "Prior period items" on face of P/L A/c... There is no procedure as such... It should meet the authorization process defined in the entity...

JE: Exp ... Dr
To Cash Bank...

Note: I understood ur query as though u are asking for items left un-written off by-mistake...

anthony

anthony (Querist)
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27 January 2009 Thanks for your reply Sir, however, if the expenses are written-off in the current year will the profit of the curent year be affected or reduced by that margin. Please reply...

Deepak Agrawal

Deepak Agrawal (Expert)
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27 January 2009 Yes ofcourse. Profit will reduce after writing off.

I think, U should not be asking this wuestion whetehr profit will reduce by booking the expense. Plz do not take it personally

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