Please Help: Accounting Rules

sarfaraz shami · #1 Thursday, October 13, 2011

All Seniors Please clearly indicate the treatment of these items in Income Statement/ Profit & Loss Account

1. Discount received should be part of Cost of Good Sold(Subtract from Purchases) or not.
2. Discount paid should be subtracted from sales or should be part of administrative expenses.
3. Carriage IN( Carriage of purchases) should be added to purchases or part of administrative expenses.
4Carriage OUT( Carriage of sales) should be added to sales or part of administrative expenses.
5. Trade Expenses

game awan · #2 Friday, October 14, 2011

Quote:

Originally Posted by sarfaraz shami

All Seniors Please clearly indicate the treatment of these items in Income Statement/ Profit & Loss Account

1. Discount received should be part of Cost of Good Sold(Subtract from Purchases) or not.
2. Discount paid should be subtracted from sales or should be part of administrative expenses.
3. Carriage IN( Carriage of purchases) should be added to purchases or part of administrative expenses.
4Carriage OUT( Carriage of sales) should be added to sales or part of administrative expenses.
5. Trade Expenses

1 & 2.two types of discount are offered in a business trade discount and cash discount .trade discount given at the time of transaction while cash discount is given on early settlement by debtor
both discount received and given refer to cash discount and would not be subtracted from purchases or sales because the discount is either on the amount due on account payable(creditor) or from account receivable(debtor)
e.g
cash 90
discount given 10
account receivable 100
if 10 % discount given to debtor

3.carriage inward is classified as direct expense thus would be debited in trading portion of Trading Profit & Loss a/c
4.carriage outward indirect expense debited in profit & loss a/c
5.trade expenses debited in profit & loss a/c

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The Following 2 Users Say Thank You to game awan For This Useful Post:
sarfaraz shami (Wednesday, October 19, 2011), The Viper (Saturday, October 15, 2011)