Following Aspects can be considered while finalization of Accounts

Company Name : ________

Assessment Year : _______

Financial Year : ________

PARTICULAR REMARK
1. Tally Opening Balance with Last Year Balance Sheet.
2. Check the difference in opening balance and     rectify it with proper adjustment.
3. Check there should not be entries in book of account on holidays.
4. All Heads In Previous Year P&L, Trading Balance Sheet Should Be In Current Year Balance Sheet And Comparison of Amount To Be Done. (Fluctuation) .
5. Reconcile Sale + Purchase With GST Returns.
6. Check whether stocks are shown on cost or NRV or not.
7. Check the compulsory expense like electric exp. Audit fee, accounting exp. Stationary exp. Etc.
8. Electricity Charges for 12 Months Entered or Not.
9. Insurance Exp. – Pre-Paid Entries To Be Done.
10. Salary Sheet – Tally with Salary Paid In Cash/Cheque. Tally with Salary Summary For Whole Year.
11. Municipal and Profession Tax – Receipt.
12. Telephone Exp. – Bill of 12 Months Entered Or Not.
13. Audit Fee to Be Entered.
14. Check Cash Exp. Vouchers.
15. Check All Cash Receipts. Should Be Signed
16. Exp. Payable Entries: telephone, Electricity, Water etc .
17. Freight Inward For All Central Purchases Should Be Entered.
18. Transfer Previous Year Pre-Paid To Relevant Expense Head.
19. Check Payment of Previous Year Expenses Payable.
20. Check the entries for PF/ESIC and verify duly with returns.
21. Check expense which is debited to Profit and Loss account but Disallowance under Income Tax Act-1961.
22. Check the proper classification of head of expenses according to nature of business of entity.
23. MAT (115JB)

MAT Credit Entitlement A/c Dr

To Profit and Loss A/c

(with the amount of MAT credit available) The account head ‘MAT Credit Entitlement’ should be shown in the Balance Sheet under the head ‘Loans and Advances’ on the Assets side.

In the Subsequent Year (i.e. the year of set off):

MAT Credit Availed A/c Dr

To MAT Credit Entitlement A/c

( with the amount of credit availed. In the Balance Sheet, MAT Credit Availed should be shown as deduction from ‘Provision for Taxation’ on the Liabilities side.

25. ESIC Exp.

Applicability: ESI scheme applies to all establishments, like corporate organizations, factories, restaurants, cinema theatres, offices, medical and other institutions which are located in the scheme-implemented areas, where 10 or more people are employed.

Employee whose monthly income is less than 21000(excluding overtime, bonus, leave encashment).

Contribution: Employees’ contribution 1.75% of the gross pay

Employers’ contribution 4.75% of the gross pay

Allowable expense in Income Tax only if before due date of particular fund.

26. PF Exp.

In this fund employer and employee have to contribute amount in equal proportion which is  12%(basic salary + dearness allowance + retaining allowance).Incase of establishments which employs less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is restricted to 10%.

It is necessary that employees’ drawing less than Rs 15,000 per month, to become members of the EPF. As per the guidelines in EPF, employee, whose ‘basic pay’ is more than Rs. 15,000 per month, at the time of joining, is not required to make PF contributions. However, an employee who is drawing a pay of more than Rs 15,000 can still become a member and make PF contributions, with the consent of the Employer and Assistant PF Commissioner.

Contri.Rate EE Contri. ER Contri.

 

PF Contri. 12% 3.67%
PF Admin. ——— 0.50%
EPS Contri. ——— 8.33%
EDLIS Contr ——— 0.50%
EDLIS Charges ——— ———
Total 12% 13%

Allowable expense in Income Tax only if before due date of particular fund.

27. Gratuity Exp.

Applicability: Employer engage in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments with ten or more employees. To be eligible for gratuity under the Gratuity Act, an employee needs to have at least five full years of service with the current employer.

Allowable  expense  in Income Tax only if Gratuity Provision Due in the current previous year.

28.Professional tax is a tax levied by the various State Governments of India on salaried individuals, working in government or non-government entities, or in practice of any profession, including Chartered Accountants, Doctors, Lawyers etc or carry out some form of business.

Deduction of Professional Tax as follow:

Monthly Salary PT (Per Month)
Up to 5999/- NIL
6000 to 8999/- 80
9000 to 11999/- 150
12000/- or Above 200
29. Check if personal expenses debited to profit and loss account.
30. Other Pre-Paid Exp. Entries like license Fee, AMC Etc.
31. Check SGST/CGST/UTGST/IGST payable or receivable as per GST returns.
32. Depreciation Entries with correct rate of depreciation.
33. Check the cash expense entries with more than 10000 according to section 40A(3).
34. Check the Ledgers of secured and unsecured loan account according to section 269SS/269ST/269T Section which are related to loan/deposit payment/accept.
35. Check the cash purchase of Fixed Asset which should be not more than 10000 and check incidental expense related to fixed asset which should be capitalize before put to use.
36. Confirmation of Secured Loans.
37. Confirmation of Unsecured Loans.
38. Confirmation of Secured Creditors.  ( Specially those with Debit Balance)
39. Confirmation of Secured Debtors (Specially Those with Credit Balance)
40. Bonus Sheet To Be Tallied With Bonus Paid In Cash And By Cheque.
41. Check Cash For Negative Balance.
42. Tally 26AS with Relevant Ledgers.
43. Reconcile All Bank Accounts.
44. Check the provision related to deduction under chapter VI-A and proper accounting entry of such  deduction.
45. Check the Provision for Brought forward losses.
46. G.P. Rate Comparison with Last Year.
47. Check All Debit Notes/Credit Notes Should Be Signed and booked into accounts.
48. Check All Discounts To Customers Or Short & Excess Or Bad Debts Vouchers.
49. If any loan taken from bank then check the entry of principle repayment and interest for every month.
50. Check the Proper grouping of ledgers of balance sheet and profit loss account.
51. Check the Year-end closing/Adjustment entry if any.
52. Donation to any religious trust/Political Contribution/ charitable trust if any than it has to be through Cheque and also check the deduction for such amount under section 80GGB/80GGC. ( Donation to charitable trust acceptable up 2000 in cash).
53. Check cash withdrawal by partner or proprietor, if no entry passed in accounts than pass such entry   and seek explanation.
54. Check whether all compliance of relevant Act has been done or not if not than check the penalty entry For the same.
Download Aspects to be considered for Account Finalisation

Author Bio

Qualification: CA in Job / Business
Company: Amal Datt & Associates LLP
Location: Ahmedabad, Gujarat, IN
Member Since: 18 Apr 2020 | Total Posts: 1

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