27 April 2015
Hi friends Would you please suggest me the accounting entry for the following? M/s XYS has received the order from overseas customer for export of goods. The order is on CIF (Cost, Insurance and Freight) basis. CIF means the Seller will incurr first all the cost, insurance and freight upto the custom port of overseas customer destination. Then the Seller will charge in the sales invoice for insurance and freight in additions to the cost of goods. Now how to account for these freight and insurance? 1. Whether the value of Freight and Insurance shall be INCLUDED in the value of Sales? OR 2. Whether the value of freight and insurance shall be EXCLUDED in the value of Sales? Further, whether the value of Freight and Insurance (as shown in the invoice) shall be shown as income / reim. of exp. on the credit side of the P&L? OR Only the net balance of Freight and Insurance ( actual freight and insurance paid LESS freight and insurance charged on the invoice which is recievable from the debtors) shall be shown on the debit side of the P&L? If both are acceptable, which is the best presentaion? If the case is covered by any specific AS or accounting principles please let me know about it.
04 May 2015
if freight and insurance are shown separately in invoice, in my opinion these must be credited in respective heads. when you pay expenses then to debit in heads
CAclubindia
