SANKAR KIRAN P (Top Edge of CA & CS) 31 August 2009
PROVISION IS A LIABILITY SO FOR EXAMPLE :
SAY U VE TO CREAT A PROVISION FOR BADDEBTS
FIRST U VE TO DEBIT THE EXPENDITURE IE., BADDEBTS
AND THEN U VE TO CREATE A LIABILITY SAYING PROVISION FOR BAD DEBTS..
SO THE EFFECT IS U VE DEBITED THE EXPENDITURE AND THIS PROVISION FOR BAD DEBTS WILL BE SHOWN IN THE LIABILITY SIDE OF THE BALANCE SHEET...
SO WHEN THE REAL BAD DEBTS OCCUR....
U WILL DEBIT PROVISION FOR BAD DEBTS AND CREDIT THE RESPECTIVE SUNDRY DEBTORS... SO THEN IT WIL BE NULLIFIED
Kaustuv (Practicing CA) 31 August 2009
I am giving you an example scenario:-
Suppose at the year end 31st March 2009, I assess that I have not received bills from our auditors to the tune of Rs. 1,00,000. We have to create provision for the same. I pass the entry:-
To Provision for expenses
On 1 April 2009, I reverse this entry,
Provision for expenses.... Dr.
To Audit Fees
Suppose I receive bills from auditors on 1st July 2009 relating to previous year services. I make the follwoing entry:-
Audit fees..... Dr.
and I finally make payment in August 09,
Hope I have been able to clear your doubts. In this way, we ensure the periodicity concept.
Purnangshu Roy (No) 11 May 2010
The quaries are as follows:
1)What will be the entry a while creating provision for B.Debt & what will be the effect in P/L & B/S in the current year & also let me know that what will be the entry in the subsiquent years if it arises Bad Dedt arises or money is been recipt against your provisions in the earlier yaer& there effect in the subsiquect year in P/L & B/S.
2)What will be the entry for Outstanding expences & there effect in P/L & B/S & What will be the entry in the subsiquent year if the Outstanding expences is paid or the earlier year entry is reverse back & there effect in P/L & B/S.
3)What is Quated & Unquated Investment & there treatment in B/S.
gokul (Accountant) 14 May 2010
Respected members may correct / fine tune the below entries
Payment of Advance Tax
Advance Tax a/c Dr. 3000
To Bank 3000
Provision for income tax
Income tax Dr. 2500
To Provision for Income tax 2500
Presentation in P/L
Net Profit before Tax 7500
Less: Current Tax 2500
Net Profit after tax 5000
Presentation in B/s
Source of Funds
Advance Tax 3000
Less: Provision for income tax 2500
(Offsetting of assets and liabilities of current tax as per AS 22)
Continue the above presentation untill the assesement is over
After the completion of assesement (if assessed tax is 2500)
Provision for income tax Dr. 2500
Refund Receivable Dr. 500
To Advance Tax 3000
vinayak c. chavan (CPT passed) 20 September 2012
I want to book telephone exp provision entry for the month of March 2012? How can i pass this entry? I want record effect of service tax also in it? Should I pass entry as follows:
1) telephone exp Rs.100
to Tele exp payable Rs.100
2) tele exp payable Rs.100
to tele exp Rs.100
(on 01.04.2012 for reversal of provision)
3) tele exp Rs.100
Input Service tax 10
to mtnl no.000012 Rs.120
(for booking march bill on 05.04.2012)
4) Mtnl 0000012 Rs.120
to Bank Rs.120
(on 06.04.2012 to make payment)
Does all above entrries are right?