Provisions entry in balance sheet or p&l account ?

Hi,I need a little conceptual clarity in provisions . suppose we have provision for taxation .We pay some tax amount in advance .That is subtracted from the gross profit in the P&L account in order to get the reserves & surplus figure .Having 'provisioned' for that tax ,does it

  1. Get shown as a deferred tax asset ,or
  2. Get shown as a short term provision (in liabilities)

in the balance sheet ? And why do we take provisions in both these statements ? Kindly clarify .Thanks in advance .

Replies (1)

Dear friend, Provisions for taxation is to be created that it is belonging to a particular year and having provided to Tax, deferred tax, the partner can share their profits or after providing for dividend and balance traf to p&la/c for the company.  If you remit the advance tax, it will be debited in income tax paid a/c in assets side. If you provide tax, then provision for taxation will be credited & appears in liability side. When the assessment is over, TDS receipts a/c, income tax paid a/c provision for taxation, & p&L appropriation a/c will be traf and tallied. correct>>>>>>.explained>>>>>.sekar.

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