Date of booking expenses

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Businessperson
391 Points Posted on 10 June 2013

ABC Pvt Ltd has outsourced their staff from XYZ Pvt Ltd and pays through cheque which the latter comes and distribute among the formers staff.

Suppose the XYZ raises the Bill on 4th May 2013 and send it to ABC for the staffs salary for month of April 2013. Shouldnt the salary expenses be booked on 30th April and the date of raising invoice immaterial?

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On 10 June 2013 at 22:19 Report
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ASSISTANT MANGER - FINANCE
411 Points Posted on 10 June 2013
In this case liability of co arises in month of April'13, so it must be booked in April'13..
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On 10 June 2013 at 22:24
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Job
561 Points Posted on 11 June 2013
Normally in business either you outsource your staff or not, salary is paid near 7th of next month, and the entry is passed on the day when payment is made, for every month's salary entry is made in next month, and in narration we write the month (like in above case April), and when cheque is issued after 30th april we cannot made entry on 30th april.
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On 11 June 2013 at 07:07
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@ Accountant
103 Points Posted on 11 June 2013

We have to book the salary when it becomes due..rising of bill does not matter......if the abc ltd. is totally outsourced through XY8 ltd.then in that case it will be payment under contract and xy ltd.has to book the salary exp..........

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On 11 June 2013 at 16:25
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Businessperson
391 Points Posted on 11 June 2013
It is bcoz if I use payment basis then monthly expenses would not be reflected correctly in the books as previous months expenses would be reflected in the current month.
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On 11 June 2013 at 17:22
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Job
561 Points Posted on 12 June 2013
There is a journal entry concept also, you can due the expense in april and make a payment entry in may
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On 12 June 2013 at 17:50
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CA Final Student
900 Points Posted on 13 June 2013

Book the expenses in the month of April and payment entry will be made in the month of May ....

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On 13 June 2013 at 16:13

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