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Can the teacher here tell me when is the point of cut-off in purchase and sales?
Do we count on the goods received / despached or count on the invoices made?Thanks
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Read IAS 18 revenue. It completely details when you must record something as sale including when goods are returned (or can be returned).
When goods are received b4 the yr end, we include them in our puchases even if the invoice arrives later.say if the invoice arrives after the yr end the transaction is included in fs as purchase accruals.when we first receive the invoice and the goods arrives after the yr end we dont include them in this year.
for each Pre-yr end grn,include inventory,puchases and payables in the transaction
for each post- end grn,the transaction must be excluded from inventory, payables and purchases
for each pre-yr end gdn,include in the transaction sales and receivables but exclude inventory
for each post yr end gdn,in the transaction include stock,but exclude sales and receivables
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