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Can amount be paid when the liability is itself not booked

Ajit kumar Dubey (Taxation Manager) (637 Points)

11 July 2012

If any one pays its liability which has not even accrued, is there any violation of accounting rules. How is this dealt in Accounting Standards and also help me with its relevance in stat audit.

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6 Replies

Ankit Mehra (Service) (176 Points)
Replied 11 July 2012

When anythin has not accrued then how come liability will arise dear.. this payment to which you are callin as pre-payment will be treated as advances as of now..

CA Ganesh Agarwala (Audit Senior Manager) (239 Points)
Replied 11 July 2012

dear ajit,

as far as your query is concerned, yes you can pay off the liability before it accrues to you. but for that you have to show the amount paid in advance accont and later you can adjust such advance with the liabilty on its accrual.

cheers

ganesh agarwala

1 Like

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 11 July 2012

Then is there any violation in respect to SA or the AS or the Indian GAAP.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 11 July 2012

If I dont do so, am I violating any of the provisions of law as far as SA or Indian GAAP is concerned.

Archana Das (CA Final student) (622 Points)
Replied 12 July 2012

Originally posted by : Ganesh Agarwala
	dear ajit, as far as your query is concerned, yes you can pay off the liability before it accrues to you. but for that you have to show the amount paid in advance accont and later you can adjust such advance with the liabilty on its accrual. cheers ganesh agarwala