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Internal audit interview question
The stock account is posted with the receipt value based on the standard price and the offsetting entry to the GR/IR clearing account is based on the purchase order price.
The purchase order price is different to the standard price: The variance between the goods receipt value and the purchase order value is posted as follows:
-
To an expense account, if the purchase order value is greater than the goods receipt value
- To an revenue account, if the purchase order value is less than the goods receipt value
When Invoice is received the GR/IR clearing account is cleared on the basis of the purchase order price. The offsetting entry is posted to the vendor account based on the invoice price. The invoice price is different to the purchase order price: The variance between the purchase order value and the invoice value is posted as follows:
-
To an expense account, if the invoice value is greater than the purchase order value
-
To a revenue account, if the invoice value is less than the purchase order value
Thanks Mr.Kuldipsinh.
That was really helpful.
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