provision entry


This query is : Resolved 

(Querist)
21 May 2008 after making provision entry it is necessary to reverse

21 May 2008 if you are reverse the entry & debited to profit & loss a/c then it is treated as income of you
f e salary a/c dr. 20000
salary payble a/c cr 20000

21 May 2008 generally we make provision for expenses for which 1) we are not sure about amount or 2) which are paid in next year like telephone exp.
in 1)you can reverse provision entry on 01 april and can enter actual amt at the time of receipt of bill and in case of 2) no need to reverse entry, at the time of payment just debit payable a/c, which is standing in liablity.

21 May 2008 What are the circumstances under which it was made and why it is reversed


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