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tejas (article)     18 April 2012

Provision for exps.....

hi friends...

how to make provision for exps. which relates partly to month of march & partly to month of april.

more clearly, i have received phone bill & credit card bill under which bill period is 15/03/12 to 15/04/12.

so, wheather we need to make part provision for such bill or not???

thanks in advance.

 5 Replies

Giridhar S Karandikar

Giridhar S Karandikar (Team Lead)     18 April 2012

Make the provision only for the period form 15th Mar-31st Mar.  Then when you make the pymt in the month of Apr post the entry by debiting the provision account, then the expense account & credit Cash/bank A/c.

One can also make an assumption that, for the bill period upto 15th of the month it can be considered as an expense for that whole month & making the provision for the whole bill amount.  this will be depending upon the policy of the company.

1 Like

frank (owner)     18 April 2012

it is better to make provisions than debiting the full amount in one month. expenses bifurcated accordingly will help in improving the bottom figure if you are preparing monthly P & L statement.

1 Like
Pradeep Singh

Pradeep Singh (article)     18 April 2012

debit that much amount as related till 31.03.2012 as  telephone exp & also debit amont up 15th april in prepaid exp a/c , credit  to party/cash/bank. & next year reverse the preaid exp to exp of that year


1 Like
Giridhar S Karandikar

Giridhar S Karandikar (Team Lead)     18 April 2012

Mr Pradeep.  An amount is transferred to prepaid account, only if the expense is paid in advance.  In this case, Tejas wants to make the provision for the elect & tel bills & he is not making any payment.  Payment will be done in the next year i.e. April.  so how can the prepaid account come into the picture??

1 Like
CA Kiran Sutrave

CA Kiran Sutrave (CA)     19 April 2012

You can follow any of the options given below -

1. You can just create a provision for the amount of expenses till March 31 and then you can reverse the provision and account for the entire bill; or

2. You can account it as an expense for the entire amount in the month of March itself.


For credit card, you can bifurcate the expenses based on the date of making payments.

1 Like

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