If you are ready to record all the transaction in tally or any other computer accounting software , then I am writing some tips for succeeding to recording in it .
- Never place the account of customer or supplier under sale or purchase . It must be under sundry debtor or creditors .
- Provident fund , professional tax , ESI etc . deducted from salary should be placed under current liabilities . However , company’s share of contribution to PF , ESI , etc. are expenses , thus should be placed under Indirect expenses .
- Income tax deducted from employees , contractors etc and deposited to Government should be placed under current liabilities . Companies own Income Tax payable to Government should be placed under provisions ( appear in Balance Sheet )
Provision for Income tax , provision for dividend etc . should be placed under provision .
- Accounts like sales tax ,excise duty are sometimes confusing ,depending how the company is treating them , if you treat the sales tax account under balance sheet , it should be placed under duties and taxes .If you teat it as revenue account , it should be treated under expenses (Direct ).
- Provision for depreciation (accumulated depreciation) should be placed under fixed asset and not under depreciation (expenses ) . Depreciation is revenue account and represent depreciation for current year not under provisions (under liabilities )