Help with basics of mathcing concept.

Whooooaaaa! AAmir! This is F3 stuff! Maybe you need to watch John's F3 lectures (I recommend that you do!) In 2013 we will show the $10,000 within the Purchases line and it is an addition within the cost of sales calculation But, because we haven't sold any of these goods, we will include $10,000 within the closing inventory amount that is deducted in arriving at cost of sales So there's no affect on cost of sales this year but the net effect of the transaction is that our cash has gone down by $10,000 (or our liabilities (payables) have increased by that amount) and there is an amount of $10,000 included within closing inventory on the statement of financial position In 2014 we sell the goods (let's sell them for $12,000) So revenue goes up by $12,000 and so does cash (or receivables) What was the cost of those sales? $10,000 They WERE in closing inventory last year and therefore included within the top line of the cost of sales calculation as an addition This year they are NOT in closing inventory so there's no amount included within closing inventory as a deduction So, in 2014, we have revenue that includes the sale for $12,000 and the cost of sales includes the $10,000 OK? Watch John's lectures!

Thanks Mike. I ceertainly shall watch John's lecture once again to brush up my basics.

You're welcome ..... and that's a really good idea :-)