I have taken over a compnay's accounts and have noticed that some company's expenses were paid from the director's bank account have been posted as paid by the company instead of being posted as director's loan.
What should I do to rectify this for all the previous years? (if anything)
Or should I just start recording the correct way from now on? The accounts will still be wrong...
Replies (15)
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lionofludesch wrote:
Is this proposed adjustment material ?
Definitely this
Whilst not disagreeing, I'm less toey about this now I discover it's a purely balance sheet error, with no effect on profit.
If there's a s455 effect, it's likely the tax has been overpaid.
Bank balance is right. The expenses were posted as cash payments.
Eh? So what was the double entry then for the payments that the company didn't make??
Bank balance is right. The expenses were posted as cash payments.
So you're saying the cash is wrong then.
We're back to the same question, really.
Well clearly if the cash account is negative its negative by the same amount as what the dla is wrong by.
Not accounting for any other F ups which were posted to cash of course.
Journal cash and dla would be the simple answer.
How wrong are they? If we're talking a million pound hole in the petty cash tin then you should probably be sorting that but really it doesn't make much difference, you're just moving a liability from one place to another.
Who is going to be negatively affected if you don't fix the prior year accounts?