When to record exp in books?????

on 1 jun, as the date on which it is incurred by employee on behalf of Company following a  accrual basis of accounting.

Mr Ankit,

It is correct to book expense on the day the company incurs it. Here although there is no outflow from the company, the employee has incurred the expenses for the purposes of the company. And so book the expense on 1st June.

With regard to Fixed Asset, capitalise it on the day it is put to use. All expenses incurred upto to the date of installation have to be capitalised. So depreciation has to be charged only from the day the machine is put to use.

Jacky is correct.

Corporates have to follow mercantile system of accounting as per Companies Law so 1st June.

Thanks both of you

but ihave another query is that cash is paid on 12 of june from co. point of view

so how to account for exp. in the book?(please give necessary journal entry)

thanks

- When the expense is incurred by company and employee (Mr X) has paid then you have to show the employee as a creditor and the entry in the books of the company is:

   Expenses a/c...Dr

        To Mr X a/c(Employee)

(Being expenses incurred by Mr X on behalf of the company)

- When cash is paid on 12th June then:

    Mr X a/c...Dr

        To Cash a/c

(Being re-imb of expenses to Mr X)

Sir

the entries are fine but when these expenses are recurring in nature say monthly basis with near about 50 emplyee or even more in office each occuring same expense-eg car reimburesement/telephone/mobile bill reimbursement,  then it will lead to volumenous entries by following above approach

in above case, there could be any other alternative for accounting?

please refer above example of say mobile bill reimbursement in circumsatnces to my first query of chronological order of getting approval, in this situation it will leat to lot of work with much delay for finance deptt of co for accounting purpose, for paper work-voucher creatiion with supporting leading a lot of wastegae of time. ( this is real example-observed during audit of client).

I want to ask same qus- what is best approach or policy should be adopted by co to ease this kind of work?

Thanks

Mr Ankit,

When the volume becomes ridiculously high then the prudent or sensible method would be to account for it as per company's convenience formulating a proper way of recording such volumnous transactions.

But even when the co decides to do it that way, it is better to make vouchers back dated, i.e. book them on the date of accrual. This has to be done appropriately. I hope I have answered your query.

Thanks