Invoiced in advance-how to incorporate
This query is : Resolved
02 May 2008
The company's financial year ends on December 31. Now it has received an invoice on September 2007 from one of its service provider for services to be performed in the year 2008( invoiced in advance) It has not not paid the amount of the invoice till December 31 2007, it has paid only in March 2008. The expenditure purely pertains to the period commencing January 1 2008. Now the question is how the company will incorporate the effect of this invoice in the accounts prepared for the year ended 31.12.2007. It should not book this expenditure(and show as an outstanding item) in the year 2007 because it does not relate to this period. How the company should give effect to this invoice in the accounts prepeared for the year ended 31.12.2007? Please provide some guidance in this respect.
03 May 2008
You should treat it like a prepaid expenditure. Accounting entry can be like this :
if exp. only booked :
On 31 dec.-
Expenses for next year A/c dr.
To party cr.
(in narration give full details)
This a/c will be shown in current assets head.
Although company have not paid the amount in this case, but for the clarification, entry would be simply dr. to party cr. to bank. On 1 Jan. can trf first a/c to exp. a/c or can do the same when service is done.
if exp. only booked :
On 31 dec.-
Expenses for next year A/c dr.
To party cr.
(in narration give full details)
This a/c will be shown in current assets head.
Although company have not paid the amount in this case, but for the clarification, entry would be simply dr. to party cr. to bank. On 1 Jan. can trf first a/c to exp. a/c or can do the same when service is done.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- Tds on building rent monthly
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
- Strategical investment in Public listed company
Trending Online Classes
CAclubindia
