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Query on accounts

SIVA BABU (Sr.Executive) (24 Points)

30 September 2010

After finalizing accounts for a financial year can we reverse the same expenditure in subsequent finanaical year in effecting the same expenditure account or shall we take that expenditure as income in the subsequent year.

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5 Replies

CA.G.Muguntha Narayanan (Internal Auditor at TVS Motors) (2195 Points)
Replied 30 September 2010

Dear Siva Babu,

If the account is operative and continous for 2 to 3 years, u can reverse. Howeer, if the account it closed and, if u r showing a reversal, that will show the expense account with a credit balance. So its better to show it as income in such cases

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Harsha (Chartered Accountant CS (Final)) (227 Points)
Replied 30 September 2010

Accounting Standard 5 Prior period items will be appliabe if the reversal of income due to error or omission happened in the previous year

(Guest)

Originally posted by : Harsha
	Accounting Standard 5 Prior period items will be appliabe if the reversal of income due to error or omission happened in the previous year

Harpreet (* * * * * *) (1670 Points)
Replied 30 September 2010

Agreed with Mr. CA.G.Muguntha Narayanan

Samrendra (Asst. Manager- Internal audit) (221 Points)
Replied 30 September 2010

According to AS 5.................... Any error occur in transaction during the previous years then should be seperately disclosed under Prior period Income or Expense....

The reason behind that is this error is due to the mistake occur during the previous years which has been rectified during the year and effecting the current year's profit