14 March 2018
Can u tell me all (Proprietor)personal expenditure cheque issued is under expenses or capital account. 1) When i take his personal expenditure under capital account,Profit is more. And 2) When i take his personal expenditure under indirect expenses difference in p&L Account. So, which one is the correct.My exact question is all proprietor personal expenses goes under capital account or indirect expenses. Opening capital account is Zero & Newly opened proprietorship Firm.Which posting is correct for balance sheet. 1) By Prop. Capital Acc Dr. Rs.xxxxxxx To Bank Acc Cr. Rs.xxxxxxx (or) 2) 1) By Prop.Indirect Expenses Acc. Dr. Rs.xxxxxxx To Bank Acc Cr. Rs.xxxxxxx
13 May 2018
Personal expenses of the proprietor are in the nature of drawings. They are not expenses of the business and are NOT allowed as expense under the Income Tax Act. Open a Drawings account under capital account.
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