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provision for expenses

monikagarg (ca) (24 Points)

20 June 2009

If any bill comes in the current year but expenses relates with last year what is the accounting entry in current & previous year.

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(Guest)

If this bill received before finalisation of books then you can consider ot expenses for that year.

You can debit the expenses a/c and Credited to party's persnal a/c If that bill has beeln received after finalisation of Books the entry will be Outstanding Expenses A/c Dr to Bank

For out Standing Expenses there must be a provision in last years book which can be done as Expenses a/c Dr to Outstanding Expenses.

If there are no provision and your books has been finalized then this expenses can be book in this year and in P/L A/c that should be shown below the line

Sanjeev Jain (Chartered Accountant) (922 Points)
Replied 22 June 2009

Hie,

You are talking about the expenses which has come upfront in the current financial year but related to last year in that case according to AS-5 any expenses or fact which will come to the knowledge of an auditor he has to make the provision of expenses in the current financial year through P& L A/c but if expense related to last year then it has to be booked as PRIOR PERIOD EXPENSES which wii be reflecting in the P&L A/c below the line.

triumph-CMA (Chartered Accountant) (503 Points)
Replied 22 June 2009

I agree with sanjeev

saurabh mitra (account assistant) (28 Points)
Replied 23 June 2009

An employees conveyance allowance is Rs. 14205/- in 2008-09 as per salary certificate. But in one of the month he has received Conv. allowance less Rs. 800/- i.e. 639/-. What to show in form 16 towards conveyance allowance. - Rs. 800* 12 or Rs. 800 * 11 + 639. Pls suggest.

Sanjeev Jain (Chartered Accountant) (922 Points)
Replied 23 June 2009

Hie,

Your Second ans is correct because as per law Amount received or Rs.800 whichever is less shall be claimed exemption & this excercise has to be carried out for each month sepreatly.