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When we purchased furniture we debited it but when goods are purchased we didn' t debit goods . why?

Prasanth kumar Kamisetty

CA Inter

★ 12K+

12-Jul-20 14:07

319

Answers (1)

Because its not a capital asset and its a current asset. We first debit to purchases and if consumed or sold during the year, it will be debited to P&L as part of "Cost of production" or "Cost of goods sold" but if they remain unsold or unutilised, then they are transferred to closing stock value and taken into the balance sheet as an asset debit balance.