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alpesh

alpesh (Querist)

29 January 2010 What is diffrence between consumption of raw material & purchase of traded goods

CA Prashant Gupta

CA Prashant Gupta (Expert)

29 January 2010 consumption of raw materil is when you purchase raw materil for use in production. like you are making pipes and purchase steel for that and use it for making pipe this is consumption of raw matrial.
purchase of traded goods is situation when person purchase goods for resale. There is no work done by him on these goods. Like you purchase steel pipes and didn't do anything on it and sale it in market then it is purchase of traded goods.

CA Prashant Gupta

CA Prashant Gupta (Expert)

29 January 2010 in P/L consumption of raw material is exp. but purchase of traded goods is shown in purchase separately and there is sale against it . Sometime companies do it for increase in sale in P/L

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