Previous year purchase

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

07 January 2012 Dear experts,

in a company (50cr T.O), purchases are accounted on the "date of receiving" the invoices rather than date of material arrival. (no provisions created) they are saying that this is their custom long since.
there are lot of previous year purchases (approx 20lakhs)they are saying that they received the invoices now only. pls tell me what will be sequence?

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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07 January 2012 Once the goods have been received in the premises of the company, the liability is crystalised.

The accounting of goods on receipt is not in order.

How do they account for stocks and carry out physical verification of inventory? There would be discrepancy in this as well.