Expense when book

This query is : Resolved

Shiv (Querist)
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17 May 2010 voucher date showing two types of date
Billing date : which is related to 2010-2011
Expenses date : related to 2009-10

when it should be booked?

this bill showing service tax.we can't entered it in 2009-10 in excise recored becuase excise work is mannual.if we entered it in 2010-11 than

it will be disallowed expenses for 2009-10

CA Shiv

CA Shiv (Expert)
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17 May 2010 did u made provision for the same in last year?

CA Suresh Kumar Agarwal

CA Suresh Kumar Agarwal (Expert)
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17 May 2010 Dear it means that you had made expenses in 2009-10. but the bill made in 2010-11.

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Shiv

Shiv (Querist)
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25 May 2010 i booked the expenses last year.

freight 5000

to provision 5000

in 2009-10

provision 5000

to party 5000

in 2010-11

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 Based on the information provided, here’s how you should approach the booking of expenses for the bill that spans across two financial years (2009-10 and 2010-11):

### Key Considerations:

1. **Billing Date vs. Expense Date**:
- **Billing Date**: The bill is dated in 2010-11, indicating when the invoice was issued by the supplier.
- **Expense Date**: The expenses relate to services received in 2009-10, which is when the services were actually performed or consumed.

2. **Accounting Treatment**:
- Expenses should generally be recognized in the financial statements in the period in which the related services are received or consumed (accrual basis of accounting).
- In your case, since the services were received in 2009-10, the expenses should ideally be booked in that financial year (2009-10).

3. **Provisioning**:
- It appears you made a provision for the expenses in 2009-10 but did not record the actual expense until 2010-11.
- If the provision accurately reflected the estimated expense in 2009-10, it should have been booked as an accrued expense (Provision) in that year.

### Correcting the Entry:

Given the situation described, here’s how you might correct the accounting entries:

- **For 2009-10**:
- Record the provision (accrual) for the expense:
```
Expense A/c Dr 5000
To Provision A/c 5000
```
- This entry recognizes the expense in 2009-10, matching it with the period in which the services were consumed.

- **For 2010-11**:
- When you receive the actual invoice and make the payment:
```
Provision A/c Dr 5000
To Party A/c 5000
```
- This entry adjusts the provision made earlier and records the actual payment in 2010-11.

### Compliance and Documentation:

- Ensure that all entries are supported by proper documentation, including the original bill, provision entries, and payment records.
- This approach aligns with the accrual basis of accounting, where expenses are recognized when they are incurred, regardless of when the actual payment is made.

### Conclusion:

To ensure compliance and accurate financial reporting:
- Book the expense in the year (2009-10) in which the services were received or consumed.
- Make appropriate provisions for expenses not yet invoiced but related to the period.
- Consult with a qualified accountant or financial advisor for specific guidance tailored to your company’s circumstances and compliance requirements.