Violation of as
This query is : Resolved
24 February 2012
If any company record its purchase on the basis of quantity sold, is there any violation of any AS? If yes which AS is violated?
24 February 2012
Dear Jaya,
When you record the purchase on the basis of Quantity sold, it will be not possible to follow FIFO or LIFO method of Valuation of Inventories.
Here the company will be violating AS-2:Valuation of Inventories.
Additionaly the section 209 of the companies act will not be followed, Which requires a company to maintain proper records to show
I) Receipts and Payments
II) purchase and sales
III) Record of assets
IV) costing records if specified for the class of company
When you record the purchase on the basis of Quantity sold, it will be not possible to follow FIFO or LIFO method of Valuation of Inventories.
Here the company will be violating AS-2:Valuation of Inventories.
Additionaly the section 209 of the companies act will not be followed, Which requires a company to maintain proper records to show
I) Receipts and Payments
II) purchase and sales
III) Record of assets
IV) costing records if specified for the class of company
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