Dear Learned Members of ICAI,
We manufacture Cosmetics and as per our Business Promotion Policy we supply free samples to our customers.
Now we want to account for this free samples - Quantity as well as Value.
Quantity of the Free Samples should get reduced from the Closing Stock and the Value should appear as an expenses under the Head Business Promotion Expenses.
When I contact Tally people through online chat they suggested me to alter the Ledger of Profit & Loss Account - so as to accept the Inventory Values and pass an Entry which is as given below:
Dr Business Promotion Expenses - Rs.10000
Cr. Respective Items - Qty 1 - Rs.10,000
This is having an effect of reducing the stock and showing the expense as Business Promotion.
IS IT RIGHT TO PASS AN ENTRY THROUGH PROFIT & LOSS ACCOUNT DURING THE FINANCIAL YEAR?
BECAUSE SOME OF MY LEARNED COLLEAGUES OBJECTING TO THIS WAY OF PASSING AN ENTRY THROUGH PROFIT AND LOSS ACCOUNT LEDGER DURING THE FINANCIAL YEAR.
THEY ARGUE THAT PROFIT&LOSS ACCOUNT LEDGER CAN BE USED ONLY TO CLOSE THE FINANCIAL YEAR END.NOT DURING THE YEAR.
PLEASE LET ME KNOW IS TALLY PEOPLE RIGHT OR MY LEARNED COLLEAGUES RIGHT?ANY ACCOUNTING STANDARD OR RULES OR PROCEDURES OR GUIDANCE NOTES SUBSTANTIATE MY COLLEAGUES ARGUMENT?
Thanks in Advance for your valuable Suggestions and Guidance in this Regards
Atchuta Ramayya Saripalle
CAclubindia
