ALimited company(unlisted) follows a practice of recording all outstanding liabilities of the nature of current liabilities(outstanding - salary, wages, creditors for expenses etc) under a single account titled "liabilities a/c". On 31st March, the client passes a Journal Voucher debiting "liabilities a/c" & crediting respective outstanding liabilities under seperate account for balance sheet purposes only. the client argues that it maintains statements and records & provides the classifications of items included in the said account at the BALANCE SHEET DATE.
Pls advice is the treatment correct. Is there a legal provision that requires recording of outstanding liablities under different heads of account.
CAclubindia
