Whether provision for bonus should be made in accounts of the year for which bonus is payable - Companies Law - No. 3/20/CL‑VI/69,

Circular: No. 3/20/CL ‑ VI/69, dated 22 ‑ 9 ‑ 1969. Subject:- Whether provision for bonus should be made in accounts of the year for which bonus is payable This Department is of the opinion that a provision for bonus should be made in the accounts of the year for which the bonus is payable although this bonus is paid in the following year. A provision for bonus is a charge on the profit before arriving at the profits for the year. Otherwise the profit arrived at will not represent a true and fair view of the profit for the year. As the amount is necessarily a provision, the provision may not be exactly equal to the payment in the following year. Therefore, any excess or shortfall should be shown in the appropriation account for the following year or in the profit and loss account, with a suitable note to the effect that it relates to the preceding year.