Proper Accounting treatment for tax penalty

One of our valuedvisitor inquired us the examples below:

How should penalty on late payment for tax been accounted for?
 It is a tax expense? or  Whether it is other expenses?

To describe: penalty made by inland revenue authority on late payment for tax shouldn't be accounted for as tax expense; it must be accounted for as administrative expense or  other expense

General Accounting along with its Reporting

General accounting and reporting is the procedure of keeping an organization’s books and reporting internally & externally. Organizations benefit from cycle time improvements in this field, as it allows finance staff more time to analyze and to reallocate resources for the future rather than spending time documenting the past and present.
General Accounting
General Accounting area can also be in charge of all operating funds,  real estate, foundations, auxiliaries, agencies and its services centers.

Bad Debt Recovered: What will be its accounting treatment?

Assuming a manufacturer, Black Mamba Company who possess large amount regular clients ( debtors), who bought on credit term. Nonetheless, a single from the client, stated XYZ Company has long outstanding debt resulting from Black Mamba Company. The outstanding position is substantially longer than business average. Therefore, the Black Mamba Company tends to make a provision of doubtful debt for the amount due for that outstanding debt due from XYZ Company.:

Debit:  Bad Debt Expense
Credit: Provision for Doubtful Debt

As a result of unexpected cash in flow to XYZ Company, and XYZ Company. pay back off the debt as a result of Black Mamba Company; therefore, in XYZ accounting book, they might reverse the provision made.

Debit:   Provision for Doubtful Debt
Credit:  Bad Debt Recovered (P&L)

Cash and Bank a Practical Audit Tips

Cash and Bank balance stands as being an asset of the firm, and is one of the essential element of balance sheet. The main assertions we concerned are: valuation, existence, obligations and its right. Through the assertions listed, we are more focused on the overstatement of the asset.

Typically, the audit works involved, the ff:
Analytical Procedure
Knowing the changes of the cash balances, one would end up being able to gauge a general idea of what had occur during the year. For example, a purchase of machine could possibly incur a general layout ( assumption: ABC company paid by cash), a sales of the company's equity shares, etc.

As a starting ground, we want to know the income incurred during the year, adjusted with regard to noncash items, like: depreciation. After that, we start to taken in other cash influence transactions. In other words, analytical procedure provide you with a general idea about what is important to expect during the entire course of audit.

Cash Book Review

Obtaining a cash book transactions listing ( cash-in & cash-out), to check the nature of the transactions. The goal is to make sure that the cash transactions are within the regular course of business.

Obtaining bank confirmation

External evidence, in such a case, are more reliable than internally-generated sources. Send out a a bank confirmation to the specific banks to confirm the balance.

Bank Reconciliation Review
In some cases, the firm might have long outstanding reconciling items, that might signals the issues of blank cheque. For this reason, bank reconciliation review is needed you to be aware of these long reconciling items.

Petty Cash count
Restaurants, hotel might keep a huge amount of petty cash available. A petty cash countis crucial to ensure the correctness of the balances.

Can be banker's assure a contingent liability?

Firms often have outstanding banker's assure for instance these provided in lieu of deposits, efficiency guarantees provided to clients and so forth. Such banker's guarantees usually do not meet the definition of contingent liabilities fall in FRS 37.
contingent liability

Assuring the Contingent Liability

The events that may well trigger payment by the banks are from the control from the Firm and are certainly not uncertain future events. The Firm will not have any present obligation till it defaults on payment of lease or fails to execute the contracts. These banker's guarantees really should not be described as contingent liabilities with the Firm within the financial statement.