Purchase Account



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If I have made a cash purchase from a supplier but the item is not to be used by me for sale to my customer, what entry will be passed?

1 Answer(s)


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You will have to pass the entry for cash purchase i.e. Dr. Purchases & Cr. Cash. But if it is not to be sold there might be two treatments:-1. one is if you will use such goods for further manufacturing or processing of goods you might show such goods under Work in Process or WIP & subsequently transfer it to your closing stock,2.the other scenario could be if you consume such goods within the entity, then no entry will have to be passed the goods will be consumed within the organization & will not form a part of your closing stock.

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