Dear Studetns
As you know that we have started self assessment weekly test. The purpose of this test is to analyz your performance at micro level and corrective measure can be taken.
As you know that we have started self assessment weekly test. The purpose of this test is to analyz your performance at micro level and corrective measure can be taken.
So how was the test? your feedback is important. should it be continued? If you do not agree , you can dissent but with some logic.
ReplyDeleteSir, kindly explain the treatment of PF and PF Contribution in final accounts.
ReplyDeleteSaloni Devpura
Basic Introduction with EPF
ReplyDeleteEmployee provident fund (EPF) is taken by EPF organization, India for the employees’ welfare and long term financial and social security of employees. According to EPF Act 1952 and its amendment both employees and employer contribute to the fund at the rate of 12 % of the basic pay include dearness allowance and retained allowance, Suppose if the employee’s basic pay is 100, then employee will contribute Rs. 12 and also employer will contribute Rs. 12 in this fund per month. Employees of company withdraw this fund after the age of 55. Every organization has to register under this fund if there are 20 or more than 20 employees are working. EPFO will have to pay just 8.5% interest rate on EPF for FY09.
Simple Accounting treatment of EPF
Accounting treatment of EPF is given under ICAI accounting standards and guidelines for treatment of employee retirement benefits under AS-15 . There are many retirement funds like , EPF , superannuation / pension , graduity , leave encashment benefits , post retirement health and welfare schemes .
All amount which pay by company or employer in the form of contribution will be the indirect expenses of business and will transfer to profit and loss account
Journal entries
Contribution in EPF ( Indirect Exp. ) Dr.
Bank Account Cr.
Because employees contribution is from his basic pay so company will not do any extra voucher entry than payment of salary
Salary Account Dr .
Bank account Cr.
It will also be indirect expenses of business .
If you pass the voucher entry in tally then you have to activate maintain payroll in features and
Payroll info >> pay head >>
create basic salary under indirect exp. and EPF as deduction from employee under current liabilities of company and employers contribution as compulsory deduction of employer under indirect expense
. You have also create the employee details, after this when you pass the voucher entries in payroll vouchers you have just write the name of employee with amount and then write epf and employer’ contribution , tally will automatically calculate net amount paid and adjust in profit and loss account . No need to pass further entries .