Treatment of advance given to supplier

where the "advance given to supplier" will be shown in balance sheet under revised schedule vi
Replies (10)

Under Trade Payables, if the advance given to the supplier is an supplier whihc provides goods to the co in it's ordinary course.  if the advance given is in the nature of creditors for expenses, then it shud be shown under 'Other Current Liabilities.

means negative figure in liabilities side.????? earlier we show this figure in the current asset . what about the capital advance???

Yes,  all advacnes paid to teh suppliers will be show debit balances & when the pruchase is being booked, the balance will turn into credit. if any amount is remaining payable to the supplier.

Capital advance will be also shown as debit balance under other current liabilities

can you provide any reference in revised schedule vi. I am unable to find this point in revised schedule vi. it will be very helpful to me .

What type of reference do you want?

any note no or page no of revised schedule vi.where such treatment is described.

Revised Schedule does not describe any treatments.  It's the way you have to present the balances under the respective heads.  The notes to accounts also explain the treatment of the trasnactions.

sir i mean whether revised schedule vi discribed specificaly about the presentation of advance given to supplier under trade payables? actually I read somewere that capital advance should be shown as non current asset. I have to represent some authentic papers to my boss about the presentation of advance given to supplier and capital advance

I have already pointed out in my earlier postings, that capital advance would not come udner Trade Payables, it would come only under other current liabilities.

Showing the advance as an asset or debiting the advnace paid to the account of supplier directly is a way of  preparing the accounts.  different organization follow different methods.  there is no such requirement that a particular method should be folowed for accounting for advances paid.  Debiting & crrediting the suppliers account wiht the advances given and booking of expense saves time in creation of numerous accounts.

thanks a lot sir...

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