Gross profit

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CA Sanjana arora

CA Sanjana arora (Querist)
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26 June 2013 hello experts,

Can a small dealer's Gross profit exceeds its sales because of closing stock.

CA Kishore Tallam

CA Kishore Tallam (Expert)
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26 June 2013 No question of profit exceeding sales. If it exceeds, u have valued ur closing stock at very high and incorrect rates.

CA Sanjana arora

CA Sanjana arora (Querist)
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26 June 2013 ya i know that...but dealer is paying very high rent and he wants to show profit so he valued his stock at high rate

CA Sanjana arora

CA Sanjana arora (Querist)
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26 June 2013 can we take Lease rent of the shop as a direct exp. for the dealer

CA Kishore Tallam

CA Kishore Tallam (Expert)
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26 June 2013 If it is a direct expense related to stock, u can take it. Even then, ur gross profit cannot exceed ur sales.

CA Sanjana arora

CA Sanjana arora (Querist)
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26 June 2013 ya if i take lease rent as a direct exp. for dealer then G.P. is lower then sale it will be 43%. but i have a doubt that can lease rent be considered as direct exp. or not

CA Kishore Tallam

CA Kishore Tallam (Expert)
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26 June 2013 It needs to be decided on a case to case basis. If it can be rendered as direct expense, then load them in closing stock else not.

CA Sanjana arora

CA Sanjana arora (Querist)
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26 June 2013 what you mean by load them in closing stock?

CA Kishore Tallam

CA Kishore Tallam (Expert)
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26 June 2013 If it is a direct expense related to stock, then the closing stock value shall also include proportionate value of direct expenses also.

CA Sanjana arora

CA Sanjana arora (Querist)
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26 June 2013 ok...thanks a lot

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Gross profit

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