When buying goods there are two types of goods you can buy \u2013 ones you use yourself in your business or the ones you sell to your customers. Since first are treated as buying services really, we\u2019re not going to focus on those in this post, but the second one.\u00a0<\/p>\n
Buying goods that you\u2019re planning to sell at a further date means you\u2019re essentially buying inventory or \u201cgoods held for sale\u201d. As such, you ought to reflect it as it is on your financial statements as well. Let\u2019s pretend you bought 1,000 items for 10 euro each, resulting in 10,000-euro payable, your initial accounting entry would be as follows (completely disregarding the aspects of taxation since it\u2019s hugely country specific and we advise you consult your local legislation for that):<\/p>\n
Db Inventory 10,000<\/i><\/p>\n
Cr Accounts payable 10,000<\/i><\/p>\n
In your inventory ledger you would enter that you bought 1,000 items with a unit price of 10 euro. As we\u2019ve pointed out before, the inventory ledger should include item based information and not just the total amounts. You\u2019re selling items, not total sum.<\/p>\n
With this entry on your balance sheet you\u2019ve increased your assets (with showing you bought some items into your inventory) and also showed that you still need to pay for the purchase.<\/p>\n","protected":false},"excerpt":{"rendered":"
When buying goods there are two types of goods you can buy \u2013 ones you use yourself in your business or the ones you sell to your customers. Since first are treated as buying services really, we\u2019re not going to focus on those in this post, but the second one.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,35],"tags":[],"class_list":["post-4123","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-7-basic-entries"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4123","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4123"}],"version-history":[{"count":2,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4123\/revisions"}],"predecessor-version":[{"id":4126,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4123\/revisions\/4126"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4123"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4123"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4123"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}