Hi,
Is reversal entries in accounts permitted under companies act instead of deleting or modifying an accounting entry ?
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Is reversal entry permitted
Replies (37)
Yes. It is your discretion to give effect to the transaction
Is it permitted under companies act ?
Companies Act has not specified such reversal of transactions. But you can follow you can follow your own internal control mechanism
So it is not wrong to reverse a wrong transaction and pass the correct entry
Few accounting ERPs don't allow to modify or delete the accounting entry. So there is no wrong in doing so
But no where in companies act specify about reversal of transactions
You can treat it as generally accepted accounting policies/ principles.
That might be your internal control
That might be your internal control
When we know it is wrong then why we have to reverse it instead of modifying it
You may ask this to your employer: top management
Why they have not given option to modiy or delete the accounting entry ?
We will not be knowing what is happening in your company and why it is happening. Better discuss with your internal depts
So that means it is not as per companies act . There might be other motive
Possibility is there
But I have asked all staff they said that they don't know and programmer has designed it
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