Purchases

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 April 2014 What should be the date of Purchase?
1. Date of Invoice.
2. Date of Receipt of goods.
3. Others

Kindly explain giving references to your solution.

Thanks

Vishnu Saboo

Vishnu Saboo (Expert)
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15 April 2014 date of purchases is decided by date of ownership transfer i.e. date of material received and accepted. for example material dispatched by party on 31st Mar on C&F basis, but received and accepted by you on 3rd Apr, then purchases date is 3rd Apr. but if the same is on ex works delivery, then when seller loaded material on your transportation and invoiced.

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Querist : Anonymous

Querist : Anonymous (Querist)

17 April 2014 Does it means that i should book purchase in my books as and when i receive goods irrespective of date of invoice????

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Vishnu Saboo

Vishnu Saboo (Expert)
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18 April 2014 yes Invoice date is not purchases date in all cases, you have to see when ownership is transferred as i told in above examples.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 April 2014 And please tell me if my client books the same in current year(as per invoice date)....how should i treat it in financial statements as an auditor?

Vishnu Saboo

Vishnu Saboo (Expert)
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18 April 2014 no he cant do it if ownership is not transferred to him on invoice date.
you may ask him clarification for doing same.

Querist : Anonymous

Querist : Anonymous (Querist)

18 April 2014 In the given case the ownership is transferred even before the date of invoice.
He told us he do not post back dated entries so he books the bill as on the date of invoice, he follows such practice not only in case of purchases but in respect of other expenses also...

Now the question is how we are supposed to treat such purchases and expenses in financial statements because neither does it qualifies as a Prior period item as per accounting standard 5 nor it is an expense related to current year???