Account confusion

Rent or Interest are the real expenses of the compant. There is one concept called matching concept in accounts.

According to that concept "All the expenses relrating to the revenue perioed should be charged to that period only it can not be charged to anyother period" therefore rent and interest of one finacial year can not be charged to any other financial year. its not uneconomical its conceptual.

dear rahul,

i think you have not gone through fundamental accounting assumption of "accrual basis". further rent and salary outstanding is an economic activity according to the "money measurement principle" of accountany. please go through AS-1.

 

cheers

ganesh agarwala

hello,

         if some one have TDS e-book  for basic knowledge than send in my email id sunilkumar15in @ gmail.com

 

Thank you

Accounting entries are supposed to be made as soon as if there's exchange of something for something. But in case of outstanding income or payable expenditure there'll no exchange until it is get paid then how Can we pass entry in advance.in some cases as long as cash exchange isnt made no transaction takes place like sales or purchase. If some one say some one says that goes gonna buy 10000rs. of goods we don't make it s entry until actually ownership of goods are transformed.In short there's no advance entry for sale then how can it be advance entry for outstanding expense or advance receivabl before it s paid or received.

Liability is incurred and provision is made.

Take a book of fundamentals in accounts and get basic concepts cleared.