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Excisse duty on finished goods

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Querist : Anonymous

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Querist : Anonymous (Querist)
12 October 2011 One of my client deduct excise duty on finished good (FY 2009) from closing stock of finished goods (FY 2009) & show an as a opening balance of current year (FY 2010)
Whether this practise is right or what is right accounting
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Jitender

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Jitender (Expert)
12 October 2011 yes, it is a correct accounting practice as excise duty is not a part of closing stock if it is claimable.
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CA SUMiT PATWARi

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CA SUMiT PATWARi (Expert)
12 October 2011 The finished goods stock is valued inclusive of excise duty as e/duty is payable on sale of goods.
This is a practise followed for closing activities by manufacturers(FY 2009).
Hence they have two balance sheet item at year end:-
Stock of FG : FG value + e/duty on FG (Dr)
ED on FG payable (Cr)

These two balances are then net off immediately at the next FY (FY2010).
Hence your client is right.

He will again make a provision for e/duty on closing stock of FG at 2010 end.
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