Answer Posted / filipdenx

A typing mistake was there in my first answer. Corrected answer is as follows:

Sales (that is credited in trading account) include the value of goods sold during the whole accounting year.
However, Purchases (that is debited in trading account) include 'only' the value of goods 'purchased in that accounting year'.
If we had an opening stock, we sell that stock also along with the purchases of the accounting year.

So as mentioned above, Sales (that is credited in trading account) include the value of goods sold that is purchased during the year + the opening stock we had.
So if we debit the purchases only we can't take the actual total expenses to account that is leading to the sales because we have sold the opening stock too.

So the actual total expenses behind the sales include purchases + opening stock. OR the actual cost of goods sold = purchases + opening stock (in this case).
Example:
Opening stock = 30000
Sales = 400000
Purchases = 170000
So sales of 400000 include not only purchases of 170000 but also the opening stock of 30000. Therefore, in trading account, sales is credited as it is the total revenue of the year. Purchases is debited as it an expense of goods sold in that year. In addition to this, opening stock is also debited for the reason stated in the above content.
This is done for finding the actual gross profit. If opening stock is not debited, gross profit will be overstated.
Here the gross profit without debiting opening stock is 400000 - (170000) = 230000
Actual gross profit after debiting opening stock is 400000 - (170000 + 30000) = 200000
Thus actual gross profit is derived thereby.

Does any one attented HSBC audit compliance test? Please let me know asap. suraj

2899

Treatment of Government grant and its utilization in P

2206

when will be appsc exams will held pls give me the dates

2759

I am Simrat Kaur. I am persuing graduation from P.U. I have an experience of 14 months as a CSA. But i hav an experience letter of 6 months.But I can show my joinin letter of the other job. I hav knowledge of basics of computer & internet. Actually, m findin job in chandigarh. I am findin the right opportunity. so, Can u plz help me in findin the right job?? Can u plz tel me abt where interviews r goin on?

2621