Expenditure over Income

Quick Summary
This discussion explores why an excess of expenditure over income, often representing a loss or deficit, might appear on the asset side of a balance sheet. Participants clarify that for companies, this debit balance is typically shown as a negative figure under 'Reserves and Surplus' as per Schedule III of the Companies Act 2013. For non-trading entities, such deficits are adjusted against the Capital Fund. The potential for future tax benefits from carrying forward losses is also highlighted as a reason it can be viewed as an asset.

A VAGUE QUERRY.

Isnt it true that eg. A balance sheet is always balanced from last year. The dual aspect of it suggests that if expenses are more, bank will deplete equally to the amount of losses. If you makeit an asset, wont an asset liability mismatch occur? 

Balance sheet is a format of financial information which gives correct replica of financial asset and liabilities .
Originally posted by : ACCOUNTANT



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.

 

Dude.,

It's very simple...

The query is not about the Schedule III (Company) or Other than Company... Right...?

The Query wrongly converted into above as Company's BS & It's Loss/Dificit... Right...?

Also, Still I'm not disagree/against to all the above replies about Sch III... Right...?

 

The Query is :

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

--> We can simply reply "The Books of Accounts is under Loss" or "May be wrong entries" or "May be it became Depreciation loss" or "Any other possibilities"

These all can be possible in Schedule III BS & PandL and Other than Schedule III BS & PandL

 

 

Again I will say the Query and the Argument not same...

It means we can not understand query properly, at Iist I myself.

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