Past years mistakes

Accounting Entries 1431 views 4 replies

Rangarajan

CA Student

200 Points Posted on 09 June 2008

Hi every one

During the year ending 31.03.07, the entries were not passed for the outstanding salaries and security charges. The balance sheet was not filed with the income tax, since the income is below taxable limit, but given to the bank for taking a loan. Now these outstanding expenses, were paid during the financial year 2007-08.

Now how do you pass entries for the same?

Replies (4)

Guest

460755 Points Posted on 09 June 2008

treat them as prior period adjustments

Rangarajan

CA Student

200 Points Posted on 10 June 2008

Hi CVK

Thanks for you comments

Can you help me with the entry

Hope to see your reply soon

Regards

Rangarajan

M.Sriram Shenoy

CA Final

814 Points Posted on 10 June 2008

Mr.Rangarajan, the entries for the above transactions are usual journal entries, which are as follows :

DEBIT Salaries (Prior Period) A/c

DEBIT Security Charges (Prior Period) A/c

CREDIT Bank A/c

Remember, these expenses SHOULD NOT BE included in the current year's salary or security charges respectively, as they relate to previous year. They should be separately shown under the head prior period items. However, these items will be disallowed by Income Tax authorities (in case you happen to file return for the current year) during the current year.

Guest

460755 Points Posted on 10 June 2008

There was no provision made for outstanding salaries, thus this wil be treated as error of omission. You should pass the following entry and disclose the notes under accounting standard 5-Net Profit and Loss, Prior Period Items,Extra Ordinary Items.

Prior Period Items (Salary for the month of March) a/c Dr.

Salary (current financial year salary) a/c Dr.

To Cash/ Bank a/c