Provision

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2013 Sir,

we want to make p&l a/c as a monthly how to do provision entry.

And also how to do prepaid expenses provisional entry...(insurance exp)

write in brief...

Thanks....?

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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30 September 2013 For Provision:
For example you want to make provision for salaries, then entry is

Salaries a/c dr
To Salaries payable a/c
(Being for the month salaries payable is provided)

At the time of actual payment of salary pass the following entry

Salaries payable a/c dr
To Cash/bank a/c
(Being salaries payable due is paid)

For prepaid expenses entry

For example you want to consider prepaid expenses for Insurance expenses pass the following entries.

Prepaid insurance a/c dr
To Insurance a/c
(Being insurance premium paid in advance for future period is provided as prepaid)

When insurance actually due then pass the following entries

Insurance a/c dr
To Prepaid insurance a/c
(Being advance premium paid for insurance is now recognised as expenses for the actually completed period).

Instead of above entries other way of entries are also possible. But for your requirement the above entries gives perfect clarification and without any confusion in accounts and accounting so i suggested above.

OM SAI SRI SAI JAI JAI SAI

Querist : Anonymous

Querist : Anonymous (Querist)

01 October 2013 Thanks very much sir,

OM SAI

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