Transactions relating to goods, Accounting Standards

The term goods refer to articles that are traded through the firm   articles bought for resale. For illustration, for book seller, books are goods, for an electrical store fans, for a furniture dealer table and chairs are goods and another electrical item are goods. Articles bought,  for utilizing them in business are not to be acted as goods. They may fixed assets or consumables and are to be reacted as in books of account.

The transactions relating to goods comprise purchases, sales, purchases returns and sales returns. Usually, as per rules, while goods are bought you will debit the Goods Account and while they are sold you will credit the Goods Account. Also, while goods are returned through your customer you will debit the Goods Account and while you return goods to the suppliers, you will credit the Goods Account. Conversely, for all transaction concerning to goods you will keep only one account that is: Goods Account. But, in practice, separate account is kept, as demonstrated below:

i) Purchases Account for recording all purchases of goods

ii) Sales Account-for recording all sales of goods

iii) Returns onwards account or Purchases Returns Account recording goods returned to suppliers

iv) Returns Inwards Account or Sales Returns Account: For recording goods returned through customers

v) Stock Account: for goods in stock as unsold goods as at the end of the year.

Hence, goods are purchased you will debit for the Purchases Account and while they are sold will credit the Sales Account. As the same, while goods are returned through your customers you will debit the Returns Inwards Account or Sales Returns Account and while you return goods to the suppliers you will credit Returns Outwards or Purchases Returns Account. There will be no Goods Account at all. It assists in ascertaining the amount of purchases and sales more correctly and rapidly.

Posted Date: 4/3/2013 6:13:47 AM | Location : United States







Related Discussions:- Transactions relating to goods, Assignment Help, Ask Question on Transactions relating to goods, Get Answer, Expert's Help, Transactions relating to goods Discussions

Write discussion on Transactions relating to goods
Your posts are moderated
Related Questions
Currently I can represent my financial position in the subsequent form:                                           Financial Position Statement 1     Amount owned by me

Organize the Trading Account from the subsequent details: Office Rent Rs. 5,000;Purchases Rs. 80,100; Opening stock Rs.25, 000; Stock at the end Rs. 15,000; Carriage Inward Rs.

Imputed Interest - If no interest or an unrealistic amount of interest is charged in a salve involving certain kinds of deferred payments, then transaction would be treated as if r

The book of Deven Verma could not be tallied. The accountant transferred the difference of Rs. 1,270 in the suspense account on the debit side. The following mistakes were found la

a.Compute the number of preferred shares that were issued during 20X6, which is Preferred stock, $100 par value, 10% $580,000 $500,000

These are assets or things of value without physical dimensions. They cannot be touched; they representing intrinsic value without material being and they are incorporeal. One of t

Hello, I am interested in help on an ACCO 310 case which is due on Tuesday the 13th at 12 PM. Please contact me at your earliest convenience and hopefully we can work something ou

Describe three examples of financial accounting practices and for each, explain how the practice assists in the decision making process

QUESTION Social accounting is a way of measuring and reporting on an organisation's social and ethical performance. It is principally concerned with offering a complementary fo

Standardization in UK and USA: although the Institute of Chartered Accountants in England and Wales began creating recommendations as 1942, real progress started along with the es