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Provision Entry


Pradeep Sharma (business)     31 August 2009

Pradeep Sharma
business 
 1 likes  38 points

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What entry we should pass for provisions????????

many recuirter ask me this question when i go for interview

pls help anc clear its function and reason

SANKAR KIRAN P

SANKAR KIRAN P (Top Edge of CA & CS)     31 August 2009

SANKAR KIRAN P
Top Edge of CA & CS 
 7 likes  226 points

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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

Kaustuv (Practicing CA)     31 August 2009

Kaustuv
Practicing CA 
 48 likes  1748 points

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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:-

Audit Fess.....Dr.

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.

To Payable/Vendor

and I finally make payment in August 09,

Payable/Vendor .....Dr.

To Bank

Hope I have been able to clear your doubts. In this way, we ensure the periodicity concept.

 

 

 

3 Like
Purnangshu Roy

Purnangshu Roy (No)     11 May 2010

Purnangshu Roy
No 
 3 likes  84 points

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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.

                                                                Gaurav Bhattacharya

                                                                9831058746

1 Like
prabhakar

prabhakar (accountant)     11 May 2010

prabhakar
accountant 
 466 points

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please tell me how dose Provision for IT is created, suppose if the Net profit after Exp. is Rs.100000/-  and also give me all entry even payment in next year of same IT

gokul

gokul (Accountant)     14 May 2010

gokul
Accountant 
 5 likes  121 points

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Respected members may correct / fine tune the below entries

1.
Payment of Advance Tax

Advance Tax a/c     Dr. 3000
 To Bank            3000

2.
Provision for income tax

Income tax            Dr. 2500
 To Provision for Income tax     2500

3.
Presentation in P/L

Net Profit before Tax     7500
Less: Current Tax        2500
Net Profit after tax     5000

4.
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

5.
After the completion of assesement (if assessed tax is 2500)

Provision for income tax  Dr. 2500
Refund Receivable           Dr.  500
 To Advance Tax                                3000

1 Like
Girish

Girish (Executive Accounts)     17 August 2011

Girish
Executive Accounts 
 21 points

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I cleared the case

 

Thanks

 

Girish

vinayak c. chavan

vinayak c. chavan (CPT passed)     20 September 2012

vinayak c. chavan
CPT passed 
 17 likes  1006 points

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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

(on 31.03.2012)

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?

 

JNANARANJAN NAYAK

JNANARANJAN NAYAK (Professional)     13 June 2016

JNANARANJAN NAYAK
Professional 
 26 points

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For Advance gratuity valuation and Gratuity & deffered tax ,how we have to close the entry for yearend activities...pls suggest me..

 

Ranjan Nayak

Mayur Chaudhari

Mayur Chaudhari   22 August 2019

Mayur Chaudhari

 2 points

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thank you so much


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