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Urgent
Dear All,
I have an query
Suppose a company have goods in transit amount of Rs.5000 how does it treat in Books of Accounts.
Please give suggestion with relevant accounting standard!!
Thanks in Advance
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Just like we treat cheques in transit, [resulting in lesser bank balance], we can treat the goods in transit by decreasing it from our closing stock. The purchases will be including it, only the sales would be decreased by the value of goods in transit. |
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I understand your query is about GIT for purchases.
If your liability to pay the goods have arisen at the time the goods departed from the supplier's godown then you need to pass the following entry: Purchases Debit. Supplier Credit. Closing stock on both P&L and BS you have to show this as GIT (inward)
If your liability arises only upon supplier delivers the goods at your location, then no entry required as it is not a GIT for you, but a GIT for the supplier.
Hope this is clear.
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Thanks sir!! for your guidance |
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