my question is if when we buy stock we debt stock and credit supplier's account. then while calculating cost of goods sold where would we get purchase figure from ? we are only making entries in those two accounts i.e stock and creditor , and no entry to purchase account .
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cost of goods sold
12y ago#1No.
When we buy goods (we do not use the word stock any more), the double entry is to debit purchases and credit payables.
The inventory account is used to record what inventory is left at the end of the period.
It might help you to watch my free lecture on inventory - the first part of it goes through the double entries.
so purchase is under current assets in the balance sheet ?
12y ago#3No. Purchases is part of cost of goods sold in the Statement of profit or loss.
The closing inventory appears in the Statement of financial position (we do not call it Balance Sheet) and also as part of cost of goods sold in the Statement of profit or loss.
(Did you watch my lecture on inventory?)
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