Past years mistakes

Hi CVK

Thanks for you comments

Can you help me with the entry

Hope to see your reply soon

Regards

Rangarajan

Mr.Rangarajan, the entries for the above transactions are usual journal entries, which are as follows :

DEBIT         Salaries (Prior Period) A/c

DEBIT         Security Charges (Prior Period) A/c

CREDIT      Bank A/c

Remember, these expenses SHOULD NOT BE included in the current year's salary or security charges respectively, as they relate to previous year. They should be separately shown under the head prior period items. However, these items will be disallowed by Income Tax authorities (in case you happen to file return for the current year) during the current year.

There was no provision made for outstanding salaries, thus this wil be treated as error of omission. You should pass the following entry and disclose the notes under accounting standard 5-Net Profit and Loss, Prior Period Items,Extra Ordinary Items.

           Prior Period Items (Salary for the month of March) a/c   Dr.

           Salary (current financial year salary) a/c                           Dr.

        To Cash/ Bank                                     a/c