Basic questions

A/c entries 485 views 2 replies

Shivani

Learner

1881 Points Joined December 2012

Hi The following may sound very basic questions to the esteemed members but I have been greatly confused and trying to find answers for a long time on these:

1. As a seller, at what point, do we raise an invoice?

2. As a seller, is it the date of invoice that is always used for entering sale entries? Does date of despatch of goods or date of receipt of goods by buyer matters while entering sale entry?

3. As a buyer, is it the invoice date that is used to enter the purchase entries? Does date of receipt of goods by buyer matters for entering purchase entry?

Please provide the point-wise answer.

Thanks to all members for their help.

Regards

Replies (2)

Ganeshbabu K

Audit and Tax Advisory

48564 Points Joined May 2012

1)Sales Can be recognized when All risks rewards and ownership of goods transfered to Buyer.A reference can be given to terms &conditions in Purchase order to decide on this.

(AS9-CAN BE REFERED)

2)As i said above it is when your risk and rewards and ownership transfered to buyer.

Ex: Suppose as per terms agreed on purchase order if it is your responsibility to deliver goods to customer gate you can recognize sale when customer received and accepted goods in his gate..till that time it is Goods -in- transit and not sale transaction

(Generally these type of verification very much required in Verification of Cut-off procedures in case of Statutory Audit)

Thanks & regards

Ganesh babu k

Ganeshbabu K

Audit and Tax Advisory

48564 Points Joined May 2012

3.In a Simular way Purchase transactions also can be recognized when risk and reward,ownership on goods transfered to buyer..

Ex: on purchase terms it is there that sellor is responsible to deliver the goods to Customer factory gate

So in this case Purchase can only be recognized when Customer accepted goods in factory gate,,which can be technically so called as GRN/MRIR(Goods received note/material receipt and inspection report)