Rate Difference entry

This query is : Resolved

Quick Summary

Rate difference arises when there is mismatch between purchase invoice and creditor ledger. It is generally adjusted through Purchase A/c or Rate Difference A/c with corresponding entry to creditor. It represents excess or short amount in purchase and is treated as expense or adjustment.

Nehas

Nehas (Querist)
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09 September 2009 In our creditors books our a/c is debited (means on debit side of our ledger in our creditors books)with rate difference of rs. 3600 when we pass foll entry then only we get our creditors ledger a/c tallied in our books with the one provided by them
entry:::
Rate Difference a/c dr 3600
to creditor a/c 3600

can u plz tell me why so
cant we pass other entry and tally and only this entry tallies it
rate difference in above case is our exp or income

CP Ram

CP Ram (Expert)
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09 September 2009 Purchase a/c ......dr. (Rate diff.)
Input VAT/ CST.....dr. (Tax on Rate Diff.)
To Creditors A/c (Total Amt.)

Gokul

Gokul (Expert)
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10 September 2009 u can enter the entry by cr. note also as-

Purchase a/c ......dr. (Rate diff.)
Input VAT/ CST.....dr. (Tax on Rate Diff.)
To Creditors A/c (Total Amt.)

Narr : Being rate diff for Inv. No.XXXX dtd. XXXXX

Message likes : 1 times

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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10 September 2009 Gokul is right.

Pur Dr
Creditor Cr

As mostly it may be because of purchase entry not booked. But this diff should not be there if you are working on a software. On top of that there must have been diff in other account too.

Message likes : 2 times

Guest

Guest (Expert)

10 September 2009 yes
the entry would be

purchase a/c dr
to creditor

but Mr. Somani, if we deemed that purchase entry is not made than how the creditor get stands in her books.

in this case the rate diff. is nothing but the excess cost you would pay for purchase of goods from ur creditor.

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