GST Plus - Get Daily updates,support, whatsapp Group & reply to GST Notices etc.!! Call : 011-411-70713 !!


Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Others   16 June 2021

Advance expenses entry

Advance expenses paid entry for current year as well as in next year and where will we show it on Balance sheet and P&l

Thank you

 5 Replies

CMA Poornima Madhava

CMA Poornima Madhava (CMA)     16 June 2021

Assuming that you follow mercantile system of accounting, advance paid will appear under current assets in the balance sheet.

As and when the expense is incurred, debit the expense to P&L and credit the asset account.

1 Like

Others   16 June 2021

Yes mam, while incurring the expense we will pass this entry
Prepaid expense A/c .. Dr
To Expense A/c

But, what about this entry
When we pay this in CY
Prepaid expense A/c ...... Dr
To Bank A/c
Ramachandran S

Ramachandran S (Chartered Accountant)     16 June 2021

1. When advance payment is made, debit pre-paid expense and credit bank.

2. When actual expense is incurred, debit expense credit pre-paid expense.

3.The entry debiting pre-paid expense and crediting expense is wrong.  Probably, this entry may be needed, only if, by mistake, when advance is made, expense was debited instead of pre-paid expense. It is a case of rectification entry.

CMA Poornima Madhava

CMA Poornima Madhava (CMA)     16 June 2021

When the payment is made:

Prepaid expense (or vendor account) Dr

To Bank

When expense is accounted:

Expense Dr

To Prepaid expense (or vendor account)

1 Like
 CA Subhankar  Basu

CA Subhankar Basu (Chartered accountant )     17 June 2021

Yes @ CMA poornima...... ultimately we are nullifying the effect of advanced payment ( current assets) from earlier period to current period's most common month end or year end journal entries.....

Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Start a New Discussion

Popular Discussion

view more »

Subscribe to the latest topics :
Search Forum:

Trending Tags