Provision for expenses

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santoshpoojary (Querist)
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08 November 2011 what is the provision for expenses? how it will be calculated ? what is pecentage of provision required ?

CA Satheesh

CA Satheesh (Expert)
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09 November 2011 Mr Poojary

When you follow mercantile system of accounting, and when you are preparing monthly/Yearly P&L, You need to book all expenses on or before month end/year end to book all accrued expenses some time the invoice will/ come later hence you need to provide in books for expenses
2. some expenses like telephone may get from 15 to 15th of month the you may need to provide in book for 15 days,
hope this will make you understand.