09 August 2010
IF ACCOUNTS ARE MAINTAINED MERCANTILE SYSTEM, THEN EXPENSES AND INCOME ARE BOOKED ON DUE AND ACCURAL BASIC. IE EXPENSES DUE BUT NOT PAID , INTEREST ACCURED BUT NOT RECD.
HENCE PROVISION FOR INTERST : IF INTERST IS TO BE PAID TO BANK BUT NOT DEBITED BY BANK THEN INTERST PROVISION IS MADE.
PROVISION FOR TAX : TAX LIABLITY IS FOR THAT FINANCIAL YEAR FOR WHICH WE ARE PREPARING BALANCE SHEETS , ON 31ST MARCH WE MADE PROVISION FOR TAX WHICH IS TO BE PAID AS SELF ASSESSMENT AFTER 31ST MARCH ITSLEF.
fOR INTERST DUE/
Interst on Loan (Profit & loss ) dr
to Provision for interst
2. for Tax Income tax (Profit & loss) Dr To Provision for Taxation
3.For interst accured but not recd
Interest accured but not recd (Current asset ) Dr to Interest accured (profit & loss ac)
CAclubindia
