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While making T account of TAX why we put Rvaluation reserve (tax) twice one on closing side which is understandable but why we also put on DR side of T account ? and why over proviion on cr side even it reduce our liability ?
Hi,
I don’t quite follow your question on the revaluation. Could you highlight where you have seen this please?
On the over provision, we have paid to much in the prior year and so the credit represents the reduction we make to this years tax expense.
Thanks
Hope you will be safe and fine iam appreciating you for the response because it helps me alot i understand the credit shows reduction but while making T ACCOUNT of TAX we we put this on CR side AS YOU mentioned that it shows reduction but the CR side of the T account of TAX shows increase in tax
THANKS
You’re over thinking it, but when the account is closed off we would then be debiting the account and crediting the profit or loss. A credit to profit or loss reduces the profits.
Thanks
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