07-15-2011, 04:24 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Shunmas</i>
<br />Asalam-o-Alaikum !
I am doing contract accounts from Sir M.A.Ghani's Advanced Accounting book.
Sir Ghani says that a contact account is basically a profit & loss account (from a contarctor's point of view). All expenses are debited and income credited.
That is fine, I understand this concept.
BUT the entry for purchasing raw material is
DR. CONTRACT A/C
CR. RAW MATERIALS A/C
Now why would we credit the raw materials?
Is it same like in general business that when we buy goods (perpetual inventory system), we debit inventory and then using transferring entries, we transfer the inventory to P & L ?
Is this concept is being followed in the above the Journal entry?
Thanks
Dear so simple
when u made a contract with a contractors
when we purchase the material pass this enrty
Purchase (M arterial Stock) Dr
Bank/Cash/Party CR
when we issue the material then just pass this entry
Asset/Expnses dr
Raw Matetrial
we can not dr the contractor account coz material is owned by company.
we are not sales the material to contractor, Just the dr the a/c of contractor only on this case when we make the payment to cont by cr the bank,cash
Regards
Sajjad Rehman
+923334054651
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
<br />Asalam-o-Alaikum !
I am doing contract accounts from Sir M.A.Ghani's Advanced Accounting book.
Sir Ghani says that a contact account is basically a profit & loss account (from a contarctor's point of view). All expenses are debited and income credited.
That is fine, I understand this concept.
BUT the entry for purchasing raw material is
DR. CONTRACT A/C
CR. RAW MATERIALS A/C
Now why would we credit the raw materials?
Is it same like in general business that when we buy goods (perpetual inventory system), we debit inventory and then using transferring entries, we transfer the inventory to P & L ?
Is this concept is being followed in the above the Journal entry?
Thanks
Dear so simple
when u made a contract with a contractors
when we purchase the material pass this enrty
Purchase (M arterial Stock) Dr
Bank/Cash/Party CR
when we issue the material then just pass this entry
Asset/Expnses dr
Raw Matetrial
we can not dr the contractor account coz material is owned by company.
we are not sales the material to contractor, Just the dr the a/c of contractor only on this case when we make the payment to cont by cr the bank,cash
Regards
Sajjad Rehman
+923334054651
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">