Propreitor sold used car (shown in his balance sheet) at a loss since sale price is less than the value in the books.. What will be the treatment of the same in the books??
Kindly enlighten your views Thanks
Replies (12)
Quick Summary
This discussion explores the accounting treatment when a proprietor sells a used car from their balance sheet at a loss. While a sole proprietorship doesn't legally separate the owner and business, accounting principles treat them as distinct for financial reporting. The consensus is that if the car was shown on the business balance sheet, the loss on sale should be transferred to the Profit and Loss account.
Dear sir The car is not a business asset and no depreciation has been availed on the same. It is just an personal asset for the Propreitor that's why shown in the balance sheet. Now the same has been sold at a loss.. If I am not wrong only amount relating to business can be debited to p&l account My question is how to de recognize the same from the asset side of balance sheet
Sir as I mentioned the business entity is a proprietary concern and as per my understanding the Propreitor and his business are not separate from each other, then no such question of business or personal
A per my knowledge individual and business are not separate entity and proprietorship is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.
The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. The sole trader receives all profits and has unlimited responsibility for all losses and debts.
Hence there should be no difference between business balance sheet and personal balance sheet
As per separate entity concept both business and businessman are different persons and accounting is done for business not for business man so if u had showed car in business Bs. then you have to transfer the loss to p&l a/c. from book value less sales price
Dear sir Thought about others views... (done) Filled ITR... (done) I am just asking my query out of curiosity as there is no separate legal entity concept for sole proprietor he is wholly responsible for his business
A per my knowledge individual and business are not separate entity and proprietorship is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. The sole trader receives all profits and has unlimited responsibility for all losses and debts.Hence there should be no difference between business balance sheet and personal balance sheetWhat's your opinion?
Yes... You are exactly correct. In individual and his business are same to the person. But, Transactions are not same with business and Proprietor...
If You are understand this then You can find out the difference. After that ask Your question again with details.
Sir accounting is done on the basics of principal concept convention and accounting standards and due to which both business and businessman are different persons and you have to maintain books of accounts separately for true and fair view presentation of financial statements and complying with frf
and if u don't think so why u are maintaing books of accounts if u both are same
For instance, a Proprietor, besides his own sole proprietorship, may also be a Partner in other Firms. The incomes so derived from other entities are his personal incomes, the crux of which, alongwith that of his Proprietorship business, shall reflect in his personal BS. Obviously it will not, in the BS of his Prop.business. Hope it helps.
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