hi,
Suppose I have received an invoice for expenses due in next year and payment is not made against this invoice in current year.
Advise me accounting entries regarding above in my books?
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Invoice issued in advance
Replies (9)
Expenses A/c --- Dr
To Provision for Expenses A/c
How can we debit the expenses account in P&L because the expenses are related to next year
No need to make entries in Current Year. To be made only when the expenses are due or paid in Current year.
No entry
By the way, can you give an example of when such a situation arises practically. I don't think any invoice is raised where neither goods/services provided nor payment required to be made.
Please write question with proper example
Prepaid expenses a/c Dr
To Vendor A/c
(Being expenditure for future period accounted)
Pay as per payment schedule and write off expenditure in respective Accounting period.
Example :
We have a company A ltd.
B Ltd. issued invoice of rs 4000 on 10-10-2015 for services to be given for the period 10-10-2015 to 10-10-2016. No payment made to B.Ltd till 31-12-2015.
tell me the accounting treatment for the financials ending on 31-12-2015.
this is happening in real
Example : We have a company A ltd. B Ltd. issued invoice of rs 4000 on 10-10-2015 for services to be given for the period 10-10-2015 to 10-10-2016. No payment made to B.Ltd till 31-12-2015. tell me the accounting treatment for the financials ending on 31-12-2015. this is happening in real
Entry as on 31.03.16
service exp a/c dr
To service exp payble
Note:- if payment not made till the financial year ends then calculate the amount of exp which is related to current financial year and then book the exp at the end of the financial year 31.03.16 ( 4000/365,*no.of days)
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