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F&O ACCOUNTING METHODOLOGY

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(Querist)
28 December 2009 In case, one buys or sells a futures lot, does one show the full value of the lot as purchase or sale, in the books of account or does one show only the margin money paid as sale/purchase?
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Arjuna Raina

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Arjuna Raina (Expert)
28 December 2009 accounting is accrual based so he should book provisions for the full value.Then he can pay or receive money in part basis against that provision.
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kumar

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kumar (Querist)
28 December 2009 Sir, in this given example which is to be taken in turnover point of view.

20-12-2009
Infosys 1 lot (200) bought at 2500 each
= 5,00,000

Margin Paid 20% i.e.,
5,00,000*20%= 1,00,000

23-12-2009
Infosys 1 lot (200) sold at 2600 each
= 5,20,000

Credited amount to our a/c is 1,20,000 i.e., Margin = 1,00,000
Profit = 20,000

Sir, in this context, please explain what to take in turnover point of view, ie.., either Purchase amount or Margin Amount
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