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Profit & Loss Account

Manoj Mahapatra (23 Points)

30 January 2008

What are the problems faced by a person while closing accounts and preparing P&L Account.

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4 Replies

CA Hemant T Dewani (Chartered Accountant) (3356 Points)
Replied 31 January 2008

when you closed accounts first upall you see the proper heads ae given and transferred entry is propely made or not.all basic principal accounting are made or not pl clerify your quiry properly

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M.Sriram Shenoy (CA Final) (814 Points)
Replied 11 February 2008

While closing accounts and preparing P&L account ; 1. Provisions would have not been made or if suppose made, it can be excess or short. 2. Closing stock valuation, if applicable. 3. Expenses which attract service tax that remain unpaid on closing date may be transferred entirely to P&L without separating the service tax component. 4. Interest incomes which may extend to period beyond closing dates may be recognised fully in this period. However, these are general and routine problems which creep up while closing accounts. Variety of problems may be encountered depending upon the size of the organisation, its business nature and other things which cannot be put in absolute terms. These can be learned only through sheer experience.

Srinivas Sharma KN (Tax Consultant) (292 Points)
Replied 11 February 2008

Some of the problems, in general are: 1. Year end purchases might not have been accounts. 2. Interest income might not have been recognised. 3. Closing stock valuation 4. Expenses provision 5. Provision for taxation 6. Depreciation entries 7. Prior period items 8. Income tax refund adjustment 9. Adjustment for non moving items Problems may even be different depending upon the status of the assessee.

CA. SUDHARSAN K G (Chartered Accountant) (472 Points)
Replied 14 February 2008

In my view the problems faced by a person while closing accounts and preparing P&L Account are * Stock, * Provisions for Expenses, * Accruals, * Adjusting Entries for Assets * Provisions for Income TAx * Previous Year Adjustments, if any * Any Interest Receivable Or Payable