CA Krishna Chaitanya M (Chartered Accountant) (463 Points)
12 June 2010what is the difference between provision for expenses and outstanding expenses, when provision is to be made, in my opinion provision is made only with respect to unknown liability , is it correct?, if rent ,electricity,telephone bills due on march paid in april , for those expenses what is the accounting treatment , either provision made or treat it as outstanding expenses
Kumar Gaurav
(Going...to be C.A soon...)
(1624 Points)
Replied 12 June 2010
Dear Chaitanya
U r absolutely rite........u can treat the outstanding only in case of if u r having bills with you because in that case have actual figure for such expense...............provision can be made only on ur estimation/last year observations/own experience for particular expense.............
I hope u r clear now..........any chaneges pl. let me updated on the same.
Bye tc
Akhil Gupta
(Manager F&A)
(856 Points)
Replied 12 June 2010
The provision is made for those liabilities which becomes due as expenses according to accrual or mercantile basis of accounting but not due for payment according to periodical payment systems like telephone bills becimes due and paid on or after 10th of every month.
Whereas outstanding expenses are those expenses for which payment is due but not paid till the balance sheet date like salary becomes due on the last working day.
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