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Expense |
Provision for Expense |
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Expense Entry is passed if Bill or Invoice has been received from party
It is a routine Entry Expense Dr To Party
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Provision for expense is made at month end for those parties/vendors who do not submit their bills It is a book closure entry like Expense Dr To Provision for Expense
(Provision for expense is also called Expense Payable) |
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Example Telephone Bill from Airtel Received of Rs 2500.Amount paid by cheque
Entry When Bill Received Telephone Exp Dr 2500 To Airtel 2500
When Payment Made Airtel 2500 To Bank 2500
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Example At the month end, The Company estimated that telephone expense for the month is Rs2500,bill not yet received from Airtel
Entry When Provision Made Telephone Exp 2500 To Provision for Expense 2500
When Bill Received next month of Airtel of 2500 Provision for Exp 2500 To Airtel 2500
When Payment Made of 2500 Airtel 2500 To Bank 2500
Note:- Instead of Provision for expense, some company’s use Ledger Telephone Expense Payable |
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Suppose Bill Received next month of Airtel of 2700
Provision for Exp 2500 Telephone Exp 200 To Airtel 2700
When Payment Made Airtel 2700 To Bank 2700 |
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Suppose Bill Received next month of Airtel of 2100 Provision for Exp 2500 To Airtel 2100 To Excess Provision Written off 400
When Payment Made Airtel 2100 To Bank 2100 |
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