Expenditure over Income

You mean to say that expenses - income = asset. Not possible. Its gross profit or operating or net profit. 

As  per schedule III of the Companies Act 2013 Debit balance of P&L ( loss) Shall be shown as a negative figure under head surplus, Similarly the balance of Reserve Surplus after adjusting negative balance of Surplus shall shown under head "Reserve & Surplus." . 

Check  out Companies Act 2013 applicable to you or not . 

Is there querist ask this as Company...??!

If Yes, please highlight the word or meaning of the word...!

The income and expenditure account is prepared by the non-trading entities to determine surplus or deficit of income over expenditures for a particular time frame. The accumulated or accrual concept of accounting is rigidly pursued while preparing income and expenditure a/c of non-trading concerns. It is prepared as a portion of final accounts of non-trading entities and is equal to the profit and loss account outlined by for-profit business entities.

The surplus or deficit from the income and expenditure account is moved to the capital fund a/c

Hence it is whether it is surplus or deficit shall be adjusted to Capital A/c only.

        As per Golden rules of accounting,

In the Balance sheet Real and Personal accounts only shown at the Debit ( Asset side) and Credit  ( Liabilities side) & the Loss/Deficit  being a Debit balance shall  ultimately  be carry forwarded to balance sheet Debit side (Asset side) and adjusted against the capital account being Credit balance until then being a Debit balance shown on the balance sheet Debit side (Asset side)..    GENERALLY IT WILL BE AUTOMATICALLY ADJUSTED 

Yes, You are exactly correct and I agreed the above said golden rules and All.

But,

The query is 

Why is the difference between expenditure over Income shown on the asset side of balance sheet.

Querist asked why it's shown asset side..

Since,

I am also asking to you all "Why it's shown in asset side...???

Is there any difference if it's company or other than company...??

Is may be shown any other side except Asstt/Liabilities...???

 C.A  Sir 

we know that income and Expenditure prepare for Non profit organisation and Profit and loss for Profit making company. , we know everything  , however querist in his query not clearly  mentioned .  

I think his query is Loss or Deficit is an Asset side ? why ?.

@ Raja P M Sir 

           Loss / Deficits  is an  asset side in balance sheet  , because  when  company  next year  earn profit  or  in future they earn profit ,  all  these  Accumulated  losses  or deficit  Can be use  for  deduction  from current  year  profit  and  untimely  , it  will  reduce  the  taxes  therefore   for future benefits  current  year  loss or deficit  is an asset . 

         For  example  Current  year  loss  is  5 Lacs in balance sheet , will be carried forward  to next  F.Y  , now in the next  F.Y  profit  is 12  lacs  , so  last  years loss of  5 lacs will be deducted  from 12 lacs , ( 12 -5 = 7 lacs ) , therefore  you have to pay tax on  7 lacs  instead  of  12 lacs , due to last  year loss . 

     In short  for future  benefits it is an asset .      

Originally posted by : prasad Nilugal
	@ Raja P M Sir             Loss / Deficits  is an  asset side in balance sheet  , because  when  company  next year  earn profit  or  in future they earn profit ,  all  these  Accumulated  losses  or deficit  Can be use  for  deduction  from current  year  profit  and  untimely  , it  will  reduce  the  taxes  therefore   for future benefits  current  year  loss or deficit  is an asset .           For  example  Current  year  loss  is  5 Lacs in balance sheet , will be carried forward  to next  F.Y  , now in the next  F.Y  profit  is 12  lacs  , so  last  years loss of  5 lacs will be deducted  from 12 lacs , ( 12 -5 = 7 lacs ) , therefore  you have to pay tax on  7 lacs  instead  of  12 lacs , due to last  year loss .       In short  for future  benefits it is an asset .

Dear Mr Prasad Nilugal...

Yes, I know it very well...

Also I know the loss/dificit is asset side (also I know adjustments and any other accounting procedures)...

I ask a question to You as above...!

The query is

Why is the difference between expenditure over Income shown on the asset side of balance sheet. Querist asked why it's shown asset side..

Why You consider this as Company or Which based You think and reply it's for Company...???

I don't know any point of view it's company...

Query asked why its in asset side...

Please check once again the query...

Dear Prasad  Nilugal

As you said earlier as shown  below,

"As  per schedule III of the Companies Act 2013 Debit balance of P&L ( loss) Shall be shown as a negative figure under head surplus, Similarly the balance of Reserve Surplus after adjusting negative balance of Surplus shall shown under head "Reserve & Surplus." .  Check  out Companies Act 2013 applicable to you or not "  AND

  To this contrary  you only says  "Loss / Deficits  is an  asset side in balance sheet  , because  when  company  next year  earn profit  or  in future they earn profit .......... "   which seems not relevant here, however you gave a very good explanation with a nice example. 

ALL THIS AMBIGUITY  COME TO END ONLY  UNLESS THE QUERIST   GIVE  A  CLEAR  EXPLANATION ABOUT HIS QUESTION

 

                 PART I — BALANCE SHEET

                    I. EQUITY AND LIABILITIES    

B. Reserves and Surplus

 (i) Reserves and Surplus shall be classified as: (a) Capital Reserves;

(b) Capital Redemption Reserve;

 (c) Securities Premium Reserve;

 (d) Debenture Redemption Reserve;

(e) Revaluation Reserve;

(f) Share Options Outstanding Account;

 (g) Other Reserves–(specify the nature and purpose of each reserve and the amount in respect thereof);

(h) Surplus i.e., balance in Statement of Profit and Loss disclosing allocations and appropriations such as dividend, bonus shares and transfer to/ from reserves, etc.; (Additions and deductions since last balance sheet to be shown under each of the specified heads);

(ii) A reserve specifically represented by earmarked investments shall be termed as a ―funds‖.

 (iii) Debit balance of statement of profit and loss shall be shown as a negative figure under the head ―Surplus‖. Similarly, the balance of ―Reserves and Surplus‖, after adjusting negative balance of 264 surplus, if any, shall be shown under the head ―Reserves and Surplus‖ even if the resulting figure is in the negative.

. 

 

Dear CA sir
Agree,   Ambiguity come to an end  only after clear explanation from quriest.

Originally posted by : RAJA P M
	Yes, You are exactly correct and I agreed the above said golden rules and All.   But, The query is  Why is the difference between expenditure over Income shown on the asset side of balance sheet. Querist asked why it's shown asset side.. Since, I am also asking to you all "Why it's shown in asset side...??? Is there any difference if it's company or other than company...?? Is may be shown any other side except Asstt/Liabilities...???

Sir As you gave an explanation from  Schedule  III of Companies Act, Deferred Expenses and Debit balance of P&L will be shown on asset side because to satisfy Matching Concept of Basic Concepts of Accounting,I.e., since all expenses are debited they are shown on Dr. side of Balance Sheet.

Expenditure over Income ultimately recognises Expenditure and which matches with third rule coming to debit side.

Please correct me if I am wrong.