Basics

Inventory means the stock we have whereas purchases means the RAw material that we've purchased

Be The Change

CA Inter

★ 11K+

14-Jun-22 15:21

Ok now for example if we purchase new raw material in the current year, will that be reflected even in the inventory during the purchase or during the end of the year after adjusting the sales?

Thread Starter

Vaibhav Gupta

CA Final

★ 18K+

14-Jun-22 15:22

For every purchase , the inventory with you will be increased and for every sale , the inventory with you will be decreased.

Avasarala Vivek Aditya

CA Inter

★ 6K+

14-Jun-22 15:43

It will be reflected in the inventory during the purchase itself.

A B S Rukmini

CA Inter

★ 3K+

14-Jun-22 17:40

We have to give same basis for inventory and purchases Purchases can be of RM / Finished goods same as Inventory can be of RM / Finished goods Max we use inventory for finished goods only

Harish Kumar

CA Inter

★ 16K+

15-Jun-22 18:45

When you purchase goods, the actual accounting entry that should happen is INventory Dr. To Creditor When the goods are sold Cost of Goods Sold To Inventory (For simplicity sake, we directly debit purchases account and treat it as an expense - academically)

CA Suraj Lakhotia

Admin

17-Jun-22 14:38