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What is the entry for lfy out standing liabilities not paid

Sravan Kumar (Accountant) (30 Points)

10 April 2012  

Hello Sir,

In FY 2010-2011 we have out standing liabilities of Rs. 15,000 (Audit Fee Payable)

that amount  we not paid in FY 2011-12 becoz of the Auditor dont want to take that amount,

after all these what is the entry i have to post in tally, & how to remove that Audit fee payable entry


 10 Replies

Giridhar S Karandikar (Team Lead) (7355 Points)
Replied 10 April 2012

Post an write-back entry as follows:

Audit Fees Payable   Dr     15000

To- audit Fees written-back A/c           15000

Why is the auditor refusing to take the amount

Aliasgar Poonawala (CA) (180 Points)
Replied 10 April 2012

Reverse entry! When you made the provision, entry must have been:

Audit Fees A/c... Dr.

     To Audit Fees Payable

 

 

Now it will be just the reverse in this year-

 

Audit Fees Payable A/c... Dr.

     To Audit Fees

Giridhar S Karandikar (Team Lead) (7355 Points)
Replied 10 April 2012

To show a more better presentation of accounts, the account Audit Fees written back can be used.  hence the said account is being credited whihc should be shown to the credit side of P&L account.

Sravan Kumar (Accountant) (30 Points)
Replied 10 April 2012

Originally posted by : Giridhar S Karandikar

Post an write-back entry as follows:

Audit Fees Payable   Dr     15000

To- audit Fees written-back A/c           15000

Why is the auditor refusing to take the amount


WHAT SHOULD I TAKE UNDERGROUP FOR AUDIT FEE WRITTEN BACK
 

Sravan Kumar (Accountant) (30 Points)
Replied 10 April 2012

Originally posted by : Giridhar S Karandikar

Post an write-back entry as follows:

Audit Fees Payable   Dr     15000

To- audit Fees written-back A/c           15000

Why is the auditor refusing to take the amount


WHAT SHOULD I TAKE UNDERGROUP FOR AUDIT FEE WRITTEN BACK
 

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 10 April 2012

yes...

REVERSE ENTRY PASSED.

ON DUE :-          AUDIT FEES A/C -----DR

                                            AUDIT FEES PAYABLE

 

ON CANCELLATION:-               AUDIT FEES PAYABLE A/C ----DR

                                                                                 TO AUDIT FEES

Giridhar S Karandikar (Team Lead) (7355 Points)
Replied 10 April 2012

It should be taken under Indirect Incomes.

Hari Wadhwa (CA in Practice) (485 Points)
Replied 11 April 2012

If the entry is simply reversed than it would dilute the disclosure of correct audit expenditure for the current year which in turn is the specific disclosure requirements of the schedule VI of companies act.

 

Further, as per standard accounting practices, any liability which is no more payable should be booked to current year income rather than reducing the expenses of the prior period.

 

Thus, it should be written back to P&L in Audit fees Payable written back a/c.

TOYIN (Accountant) (21 Points)
Replied 23 April 2012

I agree with Hari Wadhwa in the above post.

However, how should such gifts be disclosed in the Financial Statements when reporting?

Raman Aggarwal (Expert) (363 Points)
Replied 24 April 2012

Originally posted by : Hari Wadhwa

If the entry is simply reversed than it would dilute the disclosure of correct audit expenditure for the current year which in turn is the specific disclosure requirements of the schedule VI of companies act.

 

Further, as per standard accounting practices, any liability which is no more payable should be booked to current year income rather than reducing the expenses of the prior period.

 

Thus, it should be written back to P&L in Audit fees Payable written back a/c.

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