What is year end provisions and how to Enter in Tally?
What is year end provisions and how to Enter in Tally? A provision is an amount set aside from a company's profits to cover and expected liability or a decrease in the value of an asset, even though the specific amount might be unknown. A provision is not a form of savings, instead, it is a recognition of an upcoming liability. First we know about what is provision expenditure and liabilities which is payable to next year. Provision is the year ended expenditure or liability which will be payable to next year e.g. Salary Payable (for March), Bonus Payable, Leave Encashment Payable or all other expenses which will be paid in next year but period of expenses is current year. Suppose you have telephone bill for the month of March but it is paid in April, it means expenses incurred in March (which is year end) and paid in April so in this case we pass a journal entry like: Dr. Telephone Expenses Cr. Expenses Payable or Telephone Expenses Payable In case of Salary ...
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