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Can amount be paid when the liability is itself not booked
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.
Replies (6)
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..
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
Then is there any violation in respect to SA or the AS or the Indian GAAP.
If I dont do so, am I violating any of the provisions of law as far as SA or Indian GAAP is concerned.
| Originally posted by : Ganesh Agarwala | ||
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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 |
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there is no violation of AS
Any payment made before service/liability incurred/provided it is to treared as advance, show it as Supplier advance.
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