Accounting Rule

We need to get some conveyance allowance pertaining to FY 2020-21. When submitted details to our accounts department, our accounts manager told balance sheet closed on 31st May 2021 and hence not possible to release the payment pertaining to closed financial year.

 

Here, my doubt is when balance sheet closed, they are saying previous year expenditure not possible to process or admissible. If so, how can they book income pertaining to previous year realised after closing the balance sheet. Is accounting system also following discriminatory rules.

 

Can you please guide.

Replies (2)
Quick Summary
The user is seeking clarification on processing a conveyance allowance for the 2020-21 financial year after the balance sheet was closed on 31st May 2021. They question why previous year expenditure cannot be processed if the balance sheet is closed, while income from the previous year realised after closure can be booked. Guidance suggests that expenses might be recognised if the balance sheet hasn't been approved by directors, otherwise, they may need to be booked in the next financial year, potentially via a 'prior period expenses' account.

Such expenses can be recognised if the BS haven't been approved yet by the directors. if in case it has been approved then to be recognised in next year
The expenditure can be debited to prior period expenses account and accordingly these will be disallowed and will be added in the profit calculation.

It all depends on how your management accept it.

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