Date of Purchase Bill

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Devendra (Querist)
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23 February 2011 M/s XYZ Pvt. Ltd. receives the purchase bill dated 21.08.10 but the purchase entry is passed on 31.10.10. The accountant explains that they record the bill once the payment is made. Is this method correct? If not, then what is he correct method? Please explain.

Thank You,
Regards,
Devendra Kulkarni

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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23 February 2011 Purchase bills need to account based on GRN(Good received Note) raised and invoice recived from the vendor, accounting on payment basis not as per the Accrual basis of accounting Principle