establishment of behalf and Loss catalogue

Can I Deduct Pre Tax Health Insurance Premiums - establishment of behalf and Loss catalogue

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Explanation of certain items of behalf and Loss Account

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Can I Deduct Pre Tax Health Insurance Premiums

1. Salaries

Salaries are paid for the services of employees and are debited to behalf and loss ac- count being indirect expense. If any salary has been paid to proprietor or partners, it should be shown separately because it requires extra medicine at the time of wage tax assessment.

2. Salaries and Wages

When wages account is included with salaries it treated is as indirect cost and is taken into behalf and loss account.

3. Rent

Rent of the office shop showroom or godown is an indirect cost and so is debited to behalf & loss account. However, rent of factory is debited to trading account. When a part of the construction has been sublet the rent received should be shown on the reputation side of behalf and loss account as a cut off item.

4. Rates and Taxes

These are levied by the local authorities to meet public expenditure. It being an indirect expenditure is shown on the debit side of behalf and loss account.

5. Interest

Interest on loan, overdraft or overdue debts is payable by the firm. It is an indirect expense; so debited to behalf and loss account. Interest on loan developed by the firm on depositor investments is an wage of the firm and so is credited to the behalf and loss account.

If enterprise has paid any interest on capital to its proprietor or partners it should also be debited in the behalf and loss account but separately because this item needs extra medicine at the time of income-tax assessment.

6. Commission

In enterprise sometimes agents are appointed to supervene sales, who are paid commission as their remuneration. So this being a selling expenses is shown on the debit side of behalf and loss account. Sometimes commission is also paid on purchases of goods, such 'as cost should be debited in the trading account. Sometimes the firm can also act as an agent to the other enterprise houses and in such cases it receives commission from them. Commission so received is shown on the reputation side of behalf and loss account.

7. Trade Expenses

They are also termed as 'sundry expenses'. Trade expenses recite expenses of such a nature for which it is not worthwhile to open cut off accounts. Trade expenses are not taken to trading account.

8. Repairs

Repairs to the plant, machinery, construction are indirect expenses are treated cost and are debited to behalf and loss account..

9. Traveling Expenses

Unless mentioned otherwise, traveling expenses are treated as indirect expenses and are debited to behalf and loss account.

10. Horse & garage Expenses

Expenses incurred for the fodder of horses and wages paid for seeing after garage are treated as indirect expenses and debited to behalf and loss account.

11. Apprentice Premium

This is the number expensed from persons to whom training is imparted by the business. It is an wage and is credited to behalf and loss account. In case apprentice selected is expensed in progress for two or three years, then the number is distributed over number of years and each year's behalf and loss account is credited with its share of income.

12. Bad debts

It is the number which could not be recovered by the trader on account of reputation sales. It is a enterprise loss, so is debited in the behalf and loss account.

13. Life insurance Premium

If the selected is paid on the life procedure of the proprietor of the business; it is treated as his drawings and is shown by way of deduction from the capital account. It should not be taken to behalf and loss account.

14. insurance Premium

If insurance selected account appears in the trial balance, it stands for the insurance of the business. This is taken to behalf and loss account. insurance selected on goods purchased, factory building, factory machines are treated as direct cost and are taken to trading account.

15. wage Tax

In the case of merchant income-tax paid is treated as a personal cost and is shown by way of deduction from capital account. Income-tax in case of companies is treated differently.

16. Allowance allowed and Received

Discount is a recompense for prompt payment. It is reliance to show Allowance received and Allowance allowed separately on the reputation and debit side of behalf and loss account respectively instead of showing the net balance of this account.

17. Depreciation

Depreciation is a loss incurred on account of use of fixed assets in the business. Generally, it is expensed from behalf and loss account at a fixed percentage. The students should practice great care as regards the rate of depreciation. If rate is without words 'per annum', then the rate will be taken irrespective of the period of accounts. This is very important when the period of accounts is less than one year. On the other hand, if the rate of depreciation is 'per annum' the depreciation should be calculated on the assets with due consideration to the period for which the asset has been used in enterprise during the year. In case of additions to assets during the year, it is advisable to ignore depreciation on additions if the date of additions is not given. Same rule shall hold good for the sale of assets during the year.

18. Stock at the end appearing in the trial balance.

It is important to emphasize the rule that balance appearing in the trial balance is taken to one and only one place. It may whether be trading account or behalf and loss account or balance sheet. Since stock at the end is an asset, it will betaken to balance sheet. On the other hand, so long as there is stock in trade, account for that must be kept open and thus be taken to the assets side of balance sheet.

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