After finalizing accounts for a financial year can we reverse the same expenditure in subsequent finanaical year in effecting the same expenditure account or shall we take that expenditure as income in the subsequent year.
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Query on accounts
Replies (5)
Dear Siva Babu,
If the account is operative and continous for 2 to 3 years, u can reverse. Howeer, if the account it closed and, if u r showing a reversal, that will show the expense account with a credit balance. So its better to show it as income in such cases
Accounting Standard 5 Prior period items will be appliabe if the reversal of income due to error or omission happened in the previous year
| Originally posted by : Harsha | ||
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Accounting Standard 5 Prior period items will be appliabe if the reversal of income due to error or omission happened in the previous year |
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Agreed with Mr. CA.G.Muguntha Narayanan
According to AS 5.................... Any error occur in transaction during the previous years then should be seperately disclosed under Prior period Income or Expense....
The reason behind that is this error is due to the mistake occur during the previous years which has been rectified during the year and effecting the current year's profit
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