Hi all,
I have obtained GST registration for my new sole proprietorship business. Current account is in the process of opening. Meanwhile, petrol expenses and other (stamp, name board etc. ) expenses are paid through my personal saving bank account.
When my business commences, what entry should I pass for these expenses paid. Can't do:
Expenses Dr
To Bank
because saving bank account is not in my business books
if i pass Expenses Dr.
To Capital, then the expenses become capital in nature and might not be allowed as deduction.
You can pass the 2nd entry i.e. Expenses A/c Dr. To Capital A/c...Crediting the amount to 'Capital A/c' does not make it Capital in nature.
You can alternatively transfer the amount from current A/c after it is opened to your personal savings bank A/c. Then, the entries will be as follows:
1. Expenses A/c Dr. To Capital A/c (being expenses incurred for business paid through savings account).
2. Capital A/c Dr. To Bank A/c (being amount transferred to savings account as reimbursement for expenses paid for business).
CAclubindia
