Provision or liability

AS 823 views 6 replies

Pankaj

Associate

50 Points Joined October 2012

Dear all,

Generaly at the time of finalisation of accounts we make some provisoning of expences related to current year.

In commen practice we pic-up that part of expences which is paid in april or may of following year.

I want to know that whether this is a provisoning or this is a liabilty,because there is no estimation of amout of that expences.

Like i received my telephone bill related to month of march in april for Rs 5000.

At the time of finalisation of accounts how i should record this amount ? and what it is ? , provison or liability

Replies (6)

Narendra

student

255 Points Joined February 2011

It's Current liability to be shown under head other current liabilities as the liability is confirmed and amount is also certain.

Mihir

Wealth Manager

5293 Points Joined December 2008

It is a liability because you may not have actually spent the amount but the expenses has been incurred for the month of march but is payable in the month of april.

RENU SINGH

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21627 Points Joined March 2011

its liablity due to its certain nature even though amount is uncertain.

Santhosh Poojary

SIEMPRE AHÍ PARA TI

15607 Points Joined December 2008

When you receive a phone bill and you haven’t paid for it then you should add that under Current liabilities..........!

satyashi

Student C.A. final

212 Points Joined November 2013

It is liability as the expense has already been incurred but the payment is to be made, since it is short term as per schedule 3 of the companies act 2013, it will be under CURRENT LIABILITIES-Short Term Provisions.