AccountancyNEB 2082
Prepare adjustment entry of provision for tax of Rs. 1,00,000.
1Answer
The adjustment entry for provision for tax is prepared to record the income tax expense for the accounting period and to show the liability for the tax payable. The entry is as follows:
| Particulars | Amount (Rs.) | L.F. |
|---|---|---|
| To Income Tax Expense A/c | Dr. 1,00,000 | |
| By Income Tax Payable A/c | Cr. 1,00,000 |
Explanation:
- Income Tax Expense A/c is debited to record the tax expense for the period in the Profit and Loss Account.
- Income Tax Payable A/c is credited to show the liability for the tax payable in the Balance Sheet. This ensures that the tax expense is matched with the revenue earned during the accounting period.
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