25 June 2023
I viewed a sole proprietor's capital account, in that account there were following credits By amt tfd th. Neft/lic By lpg subsidy And following debits To amount of rmf transfered as per c/c act To amount tfd as per c/c account (nippon) To cheque no***/star health insurance To cheque no ***/ lic To advace tax To income tax... My queries :- Why are there these things of personal nature like lic, income tax, star health insurance, lpg subsidy, investment in rmf and nippon credited or debited in business capital account.... If they are shouldn't they all be shown as withdrawls or additions...because they are not concerns of business... And i assume c/c means cash credit how can it be used for buying rmf and nippon mutual funds, isnt it granted for working capital purposes, shouldnt it only be used for business.... What does individually these entries mean like how come lic is paying him money, if a policy matured or what and how come it is being brought into books it is personal, same with lpg subsidy... Shouldnt income tax be paid by him personally and profit from this business shown under pgbp but he debiting the same in business books... What the deal with advance tax....
25 June 2023
Pension may be received from LIC. It's prop capital account such transactions not related to business is allowed. To identify the transaction nature of payment or receipt is indicated. Such is the practice in case of proprietor in capital account.
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