Final accounts of sole proprietorship

Accountancy

It looks like there has been an error in pl which has been revised Sir has seen that Prepaid insurance is an asset which has been treated as revenue by putting it in the credit side of the pl account The prepaid insurance is to be deducted from profit not to be added

Gurukanta Singh

CA Inter

★ 20K+

16-Jul-25 22:17

270

Answers (4)

To the point, prepaid is deducted from expense and here we forgot prepaid expense (insurance)

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Ashta Sharma

CA Foundation

★ 5

19-Jul-25 10:05

While preparing a profit and loss account we charged more prepaid insurance as a result profit was undervalued by 20000 to bring pl at we added 20000 to profit

Thread Starter

Gurukanta Singh

CA Inter

★ 20K+

19-Jul-25 10:08

For expense it is deducted and here it is added in profit on the credit side. Confused

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Ashta Sharma

CA Foundation

★ 5

19-Jul-25 10:23

Ashta Sharma

For expense it is deducted and here it is added in profit on the credit side. Confused

Whether you deduct from expense side or add to income side, the final impact is same.

CA Suraj Lakhotia

Admin

21-Jul-25 15:34