09 May 2011
I SAW THE ACCOUNT STATEMENT OF IOC THERE ARE BOTH DEBIT AND CREDIT ENTRY OF FLEET CARD. IF IT IS DEBIT THEN ABOVE ENTRY IS APPLICABLE AND IF THERE IS CREDIT THE WHAT WILL BE THE TREATMENT?
09 May 2011
In case of credit, means the company gets advance money from the fleet card owners, then in the books of fleet card owners, the same entries shall reflect, except that the fleet card shall be grouped under advances given i.e. under asset side.
25 July 2024
The accounting treatment of fleet card purchases at a petrol pump involves recording both the purchase of diesel/petrol and the settlement of the payment through the fleet card. Here's how it typically works:
1. **Recording the Purchase of Diesel/Petrol**: - When diesel or petrol is purchased using a fleet card at the petrol pump, the petrol pump will issue a sales invoice or sales receipt to the fleet card holder (which could be a company or an individual using a fleet card). - The petrol pump will record this transaction in its books as a sale of goods (diesel/petrol) to the fleet card holder. This is usually recorded in the sales register or sales day book.
2. **Accounting for Receivable**: - If the payment is not settled immediately (which is common with fleet cards where payments are settled periodically by the fleet card issuer), the amount receivable from the fleet card issuer (company) is recorded in the accounts receivable ledger. - The amount receivable is typically recorded under a specific account name related to fleet card receivables or similar.
3. **Settlement of Payment by Fleet Card Issuer**: - Periodically (usually monthly), the fleet card issuer will settle the outstanding balance with the petrol pump for all purchases made using the fleet card. - When the payment is received from the fleet card issuer, the petrol pump will record this as a receipt of payment in its cash or bank account.
4. **Reconciliation Process**: - The petrol pump will reconcile its sales records with the payments received from the fleet card issuer to ensure all transactions are accounted for correctly. - Any discrepancies or adjustments needed are addressed during the reconciliation process.
### Example of Journal Entries:
Let's assume a simplified example where a fleet card holder purchases diesel for INR 10,000:
1. **At the Time of Sale**: - Sales Account (e.g., Sales of Diesel) Dr. INR 10,000 - Fleet Card Receivable (Accounts Receivable) Cr. INR 10,000
2. **Upon Receipt of Payment from Fleet Card Issuer**: - Bank Account Dr. INR 10,000 - Fleet Card Receivable Cr. INR 10,000
This example illustrates the basic accounting treatment where the petrol pump recognizes revenue at the time of sale (even though payment is pending), and then adjusts its accounts upon receipt of payment from the fleet card issuer.
### Important Considerations:
- **Revenue Recognition**: Revenue from fleet card sales is recognized at the time of sale, regardless of when payment is received.
- **Receivables Management**: Proper management of fleet card receivables is crucial, ensuring accurate tracking and timely reconciliation with payments received from the fleet card issuer.
- **Compliance and Reporting**: Ensure compliance with applicable accounting standards and tax regulations related to sales and receivables.
By following these accounting practices, petrol pumps can effectively manage fleet card transactions and ensure accurate financial reporting of sales and receivables related to diesel/petrol purchases made using fleet cards.
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