27 May 2015
Purchased goods are initially treated as cost of goods which will be sold during the year. It is only at the end of the year we make an adjustment for the goods which remain unsold, i.e. closing stock. Hence purchase is nominal account.
If we purchase huge quantity of stationery we will first debit it to stationery account as an expense. If some stock is remaining at the end of the year we can adjust it to 'Stock of stationery' or 'prepaid' account at the end of the year.
CAclubindia
