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Accounting effect of Prov. of Excise duty on Finished goods

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This query is : Resolved

surinder kumar (Querist)

03 February 2009 It is stated that as per ICAI guidance notes, Exise duty provision is made on Finished goods having no effect on the profit & loss account, Is it true? what entries to be passed while making the provision of excise duty on FG. Please reply.

Jitender

Jitender (Expert)

03 February 2009 provision is to be made on finished goods lying in stock .

excise duty dr
to provision for excise duty.

surinder kumar

surinder kumar (Querist)

04 February 2009 1. Excise Duty will be debited as expense
2. credited as liability.
3. And also added to the FG value.

There will be not effect on Profit & loss account by the above entry, only this will provide the presentation of that and show the liability of excise duty on company,

As per AS-2 This is the requirement to make the provision of Excise duty on FG.

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