So you sold something with below their cost and earned a loss because of it. Does it affect your prior year or prior period results?
Most probably you’re saying “no”, however, to be correct, if your prior period results are still open and had you known you’d make a loss, you would have recognized the loss as a provision on the balance sheet at the time (expense at the end as well), you should correct the prior periods. Continue reading
Matter of fact is that the differences obviously arise, however I was just recently approached with a question on how to overcome those and ensure they don’t arise. Continue reading
The production price of your goods in stock should include all expenses that were made in direct connection with producing them. However, what happens if it’s not so and the pricing only includes the direct material for an example? Continue reading
You produce goods and price them according to your expenses. However, which of your expenses from the income statement are included? You may ask now if all expenses on the income statement should be included within the price of the produced inventory. Well, the answer is that in fact not all need to be included, but quite a lot of them. Continue reading
When starting to group your expenses, when initially preparing your set of accounts, think through the subject nature of the accounts and the expenses you plan to put to those accounts – are they similar in nature? Always ensure that the account name describes which expenses are accounted onto them. That’s first. Continue reading
Initial response is always “no”. Why would you? Accounting for something without a source document is firstly not allowed by most regulations and secondly, how do you know if the supplier is shipping them with correct prices and if quality is important, how have they measured the quality etc. You shouldn’t account for goods without an invoice. Continue reading
Something I have come across is an opinion that the inventories are recorded in a “risk free” price if you don’t add any overheads, payroll, depreciation or additional materials used in the production to the unit price and let it just be in its base material expense. Continue reading