I am working with a Proprietorship firm. If we reimburse the amount of fuel used by proprietor, should we book this exp or to be deducted from the Capital.
05 December 2009
From the language of the question; it seems that the expenditure is in connection with the business. If petrol expenses are used for business purpose; then it is entirely revenue in nature and thereby allowable expenditure. Hence not to be debited to capital.
However; if fuel expenses is used for personal purposes; then it will be debited to capital account.
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