Hey there! Sign in to join this conversationNew here? Join for free
    • Thread Starter
    Offline

    15
    ReputationRep:
    Do you ALWAYS minus goods for own use from sales?
    Offline

    0
    ReputationRep:
    (Original post by Blyts-_)
    Do you ALWAYS minus goods for own use from sales?
    No you minus it from purchases, as you have not actually sold the goods but have purchased them, so it needs to be accounted for in the income statement.

    Also the figure will be added to drawings in the balance sheet for sole traders.
    • Thread Starter
    Offline

    15
    ReputationRep:
    (Original post by gunner4life95)
    No you minus it from purchases, as you have not actually sold the goods but have purchased them, so it needs to be accounted for in the income statement.

    Also the figure will be added to drawings in the balance sheet for sole traders.
    Okay, so do you ALWAYS minus it from purchases? I seen a mark scheme for a paper where they added to the gross profit, do you know what that is?
    Offline

    0
    ReputationRep:
    (Original post by Blyts-_)
    Okay, so do you ALWAYS minus it from purchases? I seen a mark scheme for a paper where they added to the gross profit, do you know what that is?
    Basically you add it to the gross profit, since cost of sales will decrease.

    For example if a owner took £1 of goods for own use, the 1st part of the IS will look like this:

    Old £ New £
    Sales 30 Sales 30

    Opening Inventory 5 Opening Inventory 5
    Add Purchases 6 Add Purchases 5
    Less Closing Inventory 4 Less closing inventory 4
    Cost of sales 7 cost of sales 6
    Gross profit 23 Gross Profit 24

    hope this helps
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Would you rather give up salt or pepper?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Write a reply...
    Reply
    Hide
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.