Clarification on Inventory

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This discussion explores the correct accounting treatment for gold coins purchased for sales promotions. The main question is whether these coins should be held in inventory or booked directly as a sales promotion expense. The advice given is to treat them as inventory under a separate head until disbursed, similar to how cash or bank balances are managed for expenses. Upon disbursement, the expense is recognised, and the inventory is credited. An alternative suggestion is to consider them as prepaid expenses, reversing the entry upon distribution.

Devulapally Satyanarayana Rao

Devulapally Satyanarayana Rao (Querist)
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20 November 2025 Dear Sir, we have purchased Gold Coins for reimburse against Sales promotion. My doubt is that whether we can show them in Inventory or booked in Sales Promotion expenses.

Sir, Thank you for immediate reply and though they are not for immediate reimbursement how can we show them in Inventory as Inventory means which the goods we trade and gold coins we are not trading.

can we maintain seperate data for them for disbursement?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 November 2025 If the gold coins are meant for immediate distribution:
Book as Sales Promotion Expenses under the Profit & Loss Account.

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CA Suresh kumar panda

CA Suresh kumar panda (Expert)
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20 November 2025 Think you have cash or bank balance for the same expense. How will you show it? It will be shown in Cash book or the Bank book. Similarly here you have gold instead of cash or bank balance. It will be shown exactly in similar manner. Keep it in inventory till you disburse but under a separate head with clear highlight of the intention. When you disburse, respective expense debit to Gold Inventory Credit.

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Devulapally Satyanarayana Rao

Devulapally Satyanarayana Rao (Querist)
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20 November 2025 Thank you Suresh Sir for reply, but if we shown Gold coins in Inventory, isn't our Gross profit will be effected or can show the same in Prepaid expenses when we expended and we will reverse concern expenditure head when we disburse the same gold coins to our dealers. is it right treatment, please suggest me

Sir,please reply

Devulapally Satyanarayana Rao

Devulapally Satyanarayana Rao (Querist)
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26 December 2025 Please give details of inventory valuation

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