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1) receive an invoice before we receive the goods
2) the goods received before the invoicesir, which among the above two scenario should we recognise purchase or expenses under accrual concept?
i think in both the scenario; purchase or expenses have been occured though cash has not been paid.Hi,
You recognise the purchase when you’ve received the goods, it is rare that you would receive the invoice before actually receiving the invoice. If you did then you would wait until the goods are received to book the invoice.
Thanks
Outstanding Invoice — Accrual Method
If you use the accrual method, you must account for expenses when they are incurred (no matter when they are paid). If you receive an invoice before you receive the goods listed on that invoice, you must count the expense on the invoice date. The delivery of the goods is irrelevant to the accounting for the expense.Delivered Goods With No Invoice
Under the accrual method, if the goods arrive before the invoice, you do not count the expense. The fact that you possess the goods does not affect the accounting method. Only enter the expense when the invoice actually arrives.This is what i read somewhere in the internet which made me confused. This is exactly opposite of what you explained. Sir, kindly relate this to the accounting standard. by the way, i am very much convinced by ur explanation.
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