The company has paid 4000 for the cake on the Occasion of New Year for New Year Celebration
What would be the Journal Entry?
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Regarding the treatment of Expenses on the occasion of New Year
Replies (17)
Quick Summary
Since these expenses are not for business purpose, you Can show it as General Expenses. write all details in narration.
General Expenses A/c Dr 4000
To Trade Creditors A/c Cr. 4000
( Expenses for purchase of Cake for new year celebration)
payment entry
Trade Creditors A/c Dr 4000
To Cash / Bank A/c Cr. 4000
( payment made)
These expenses may not allowed for income tax purpose .
General Expenses A/c Dr 4000
To Trade Creditors A/c Cr. 4000
( Expenses for purchase of Cake for new year celebration)
payment entry
Trade Creditors A/c Dr 4000
To Cash / Bank A/c Cr. 4000
( payment made)
These expenses may not allowed for income tax purpose .
@ Mr Prasad Nilugal,
Why it's not allowed for income tax expenses...???
is there any specific reason(s)...?
Why it's not allowed for income tax expenses...???
is there any specific reason(s)...?
I used word " May be" , because these expenses are not for business purpose, look like. section 37 of the income tax Act , may be applicable.
All entertainment expenses are expenses. Perks are indirect expenses
Entertainment expenses cannot be tax incentivised and they have the highest tax rate
@ Raja PM
Company vehicle delivering goods to its customers:
Fuel expenses are direct costs included in closing stock
Repairs and maintenance is indirect cost correct?
If not tax then , one may show many expences in p&L to reduce profit and untimetaly reduse tax .
| Originally posted by : Yasaswi Gomes new | ||
 |
@ Raja PM Company vehicle delivering goods to its customers: Fuel expenses are direct costs included in closing stock Repairs and maintenance is indirect cost correct? |
 |
Yes, You are exactly correct.
May be Some times the delivey vehicle's fuel considering into Indirect Exp.
But, Generally this practice not in force...
I can understand why. Thats because its hard to forecast number of deliveries to include them into inventory and thats why they use revenue recognitions transaction cost method. But NRV valued inventories have fuel expenses included into the selling price
| Originally posted by : Yasaswi Gomes new | ||
|
I can understand why. Thats because its hard to forecast number of deliveries to include them into inventory and thats why they use revenue recognitions transaction cost method. But NRV valued inventories have fuel expenses included into the selling price | |
Yes Correct...
Some of the employers want exact details of the transactions and insist employees for keep the transporting as separately like Delivery and Inwards...
| Originally posted by : RAJA P M | ||
|
Originally posted by : Yasaswi Gomes new I can understand why. Thats because its hard to forecast number of deliveries to include them into inventory and thats why they use revenue recognitions transaction cost method. But NRV valued inventories have fuel expenses included into the selling price Yes Correct... Some of the employers want exact details of the transactions and insist employees for keep the transporting as separately like Delivery and Inwards... |
|
In this way they keep two ledger under Indirect and Direct
I think nrv valued inventories dont hold fuel as direct expense because all costs necessary to make sale are subtracted from it. We can conclude its an indirect cost!!
| Originally posted by : Yasaswi Gomes new | ||
|
I think nrv valued inventories dont hold fuel as direct expense because all costs necessary to make sale are subtracted from it. We can conclude its an indirect cost!! | |
Yeah...
If trading business then its Indirect...
If mfg under Direct & (and/if segregate then Indirect)
| Originally posted by : Yasaswi Gomes new | ||
|
I think nrv valued inventories dont hold fuel as direct expense because all costs necessary to make sale are subtracted from it. We can conclude its an indirect cost!! | |
Yeah...
If trading business then its Indirect...
If mfg under Direct & (and/if segregate then Indirect)
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