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Urgent audit query

manik (ca in practice) (420 Points)

04 July 2011

one of our clients have been following a practice of recording purchases at total value of bill which includes all related purchase expenses like labour, commision, stiching of bags, local duties etc.my question is is this practice ok or not and if not how does it affect.pls advice

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7 Replies

Vijay (Adamo Studio) (2112 Points)
Replied 04 July 2011

There is nothing wrong in recording purchase at Gross value

Darshit (CA Final) (964 Points)
Replied 04 July 2011

I think taxes if the credit is obtained should be deducted from Purchases, rest all is ok, as ultimately all the Purchases related expenses forms part of Gross Profit and hence it is ok.

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 04 July 2011

Originally posted by : Vijay Manwani
	There is nothing wrong in recording purchase at Gross value

Dheeraj (Learner) (1100 Points)
Replied 04 July 2011

agree with vijay...

the main point is to show the expense..

and purchase related expenses are the direct expense

so these have the same effect either shown seprately in TRADING A/C or add with the purchase amount.

Nothing wrong at all

mukesh (accountant) (109 Points)
Replied 05 July 2011

current rate of vat in uttar pardesh , monthly challan number and last date of deposite challan and return form with last date of deposite of return

sagar (CA FINAL STUDENT) (60 Points)
Replied 05 July 2011

in order to show a true & fair view of financial statements it is advisable to show the direct expenses related to puchase seperately in the trading account, however the treatment given by your client is also not wrong