Accountancy, asked by Kaish09, 6 months ago

Income tax refund of ₹500 of owner of sole proprietorship deposited with bank account of business.
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Answers

Answered by BrainlyNisha001

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What is the journal entry for income tax paid by cheque?

OnePlus 7T.

Income tax is a form of tax levied by the government on the income generated by a business or person. Accounting and journal entry for income tax is done in a distinct way for different types of business establishments i.e. Sole Proprietorship, Partnership, and Private Limited Company

Journal Entries in Case of – sole proprietorship

For a Sole Proprietor, income tax is not an expense incurred to generate revenue hence it is not treated as an expense to be paid out of profits. In this case, income tax is treated as a personal expense resulting in drawings from the business concluding to a reduction of capital.

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