Corrections during the accounting period
Corrections during the accounting period before the financial statements are prepared do not pose any major problem. In an open accounting period, the accounting entity can find the error and correct it retrospectively. It is even possible to correct the financial statements that have already been prepared, if they have not yet been approved . However, no later than the end of the following accounting period .
An entity receives an invoice received in December 2024 for services performed in May 2024. Can it post this invoice received by December 2024?
Example
In April 2024, the accounting entity received a credit note from a VAT non-payer for the purchase of materials – the corrective tax document reduced the original invoiced amount. During accounting, the document was mistakenly posted as positive instead of negative – instead of reducing costs, they increased. Since the document was from a VAT non-payer, there is no need to correct the VAT return. The accountant discovered the error in November 2024. How should the accounting entity make the correction?
The accounting entity can correct the original posted document. Since it is from a VAT non-payer, it is not necessary to correct the VAT return. If this is not technically possible, it can make the correction at the time the error is detected in November 2024. This is done by canceling the original incorrect document – posting it negatively. And posting the document again correctly.
Corrections to the closed accounting period
However, if the error is discovered after the financial statements rich people database have been prepared and approved, it is no longer possible to intervene in the closed period and correct it in any way . In such a case, we will correct the accounting error in the following open accounting period . We account for corrections of insignificant accounting errors in the income statement, i.e. on the expense and revenue accounts in the following accounting period . And this is on the current accounts to which the given accounting operation would be charged. However, we must charge to non-tax accounts so that the corrections are not reflected in the tax return for the current accounting period.
Income tax corrections can only be made by filing an additional tax return for the period to which the given expense or income relates. However, if we find that the tax was lower than it should have been, we are obliged to file an additional tax return . If a tax entity finds that the tax was higher than it should have been, the tax entity is entitled to file an additional tax return . When the tax is increased, we must file an additional return; we do not have to file an additional return for a tax reduction, but we can.
Corrections of significant accounting errors are made through where is cell phone data stored account group 42 – Other retained earnings . The specific account number is a matter for the accounting entity. In practice, account 426 or 427 is often used for Other retained earnings .
What is considered a material error must be determined by the accounting entity itself in its internal regulations.
the closed accounting period
An accounting entity may decide to correct even insignificant errors through account 42 – Other profit or loss from previous years.
Example
The accounting entity – sro prepared financial statements and corporate income tax return for 2023. The return was filed and the statement was approved by the general meeting. The issued invoice will be issued in 2024. This is a significant amount.
How will the accounting entity proceed?
The LLC is obliged to file an additional tax return for 2023 and thailand data increase the tax base and tax on unrecorded revenues.
As for accounting, it is no longer possible to interfere with the accounting for 2023. The accounting entity will correct the error in the accounting period 2024, through account 426 – Other profit or loss from previous years. Accounting MD 311 / D 426.
Corrections accounting period
The accounting entity sro prepared financial statements and corporate income tax return for 2023. The return was filed and the statement approved by the general meeting. During 2024, the sro received an invoice for services from 2023 in the amount of CZK 1,500. This amount was not reflected in the accounting or in the tax return for 2023. At the same time, it is an insignificant amount. How will the sro proceed?