Journal Entry

This query is : Resolved

Guest

Guest (Querist)

20 June 2011 Today i was doing a company's tax audit and i noticed a journal entry which was as follows:-
VAT Tax Payable A/c Dr.
To Income a/c

So i asked my senior about the same and he replied that it happens when people want to save or get rid of tax liability..

Please suggest whether the accountant was correct in passing such a journal entry..
Thanx in advance!

ABHISEK TOSNIWAL

ABHISEK TOSNIWAL (Expert)
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21 June 2011 Dear Disha,

No its not a correct entry which has been passed by the said accountant. He has transfered his payables to his income account which is a wrong accounting practice totally.

Regards,