Usually,when goods are given for charity,the entry is
Donation ac. Dr
Why can't we just credit inventory?
(My grammar is 💯 good I)
Replied 08 December 2021
we do that right. From
This will setoff purchases with inventory and the remaining can be shown as loss due to donations and get that balance subtracted from revenues;
Another way to explain is
There is no other way. Only closing inventory like above is used in profit statement. I'm just wondering myself why is there no dispatch account as an offbalance sheet account. That way
To inventory a/c can be recorded. Sometimes these inventory causes problems and main in auditing cause it's hectic and prone to errors.
To think of, we don't have to derecognise purchases.
But this will impact non gaap measures like gross profit margin ratio
I meant gaap measures. Ebitda is a non gaap one