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Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part of
- a)Closing stock.
- b)Sales.
- c)Goods in transit.
- d)Sales return.
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. S...
Explanation:
Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyers risk. Therefore, such goods should be treated as part of Sales.
The given scenario involves the sale of goods to Mr. A for Rs. 50,000 at a profit of 20% on cost. However, these goods are still lying in the godown at the buyer's risk. In this case, the goods have been sold, and the revenue from such sales should be recognized as part of sales for the year ended 31st March, 2005. Therefore, the correct answer is option 'A', i.e., Sales.
In accounting, revenue recognition is an essential aspect of financial reporting. Revenue should be recognized when it is earned, and the risks and rewards of ownership have been transferred to the buyer. In this scenario, though the goods are still lying in the godown at the buyer's risk, the ownership of the goods has been transferred to the buyer, and the revenue from such sales should be recognized as part of sales.
Conclusion:
In conclusion, the goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost should be treated as part of Sales, as the revenue from such sales should be recognized as per the revenue recognition principle.
Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyers risk. Therefore, such goods should be treated as part of Sales.
The given scenario involves the sale of goods to Mr. A for Rs. 50,000 at a profit of 20% on cost. However, these goods are still lying in the godown at the buyer's risk. In this case, the goods have been sold, and the revenue from such sales should be recognized as part of sales for the year ended 31st March, 2005. Therefore, the correct answer is option 'A', i.e., Sales.
In accounting, revenue recognition is an essential aspect of financial reporting. Revenue should be recognized when it is earned, and the risks and rewards of ownership have been transferred to the buyer. In this scenario, though the goods are still lying in the godown at the buyer's risk, the ownership of the goods has been transferred to the buyer, and the revenue from such sales should be recognized as part of sales.
Conclusion:
In conclusion, the goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost should be treated as part of Sales, as the revenue from such sales should be recognized as per the revenue recognition principle.
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Community Answer
Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. S...
In this scenario, goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost are still lying in the godown (warehouse) at the buyer's risk. Since these goods have not yet been transferred out of the seller's possession (they remain in the seller's warehouse), they should be treated as part of closing stock.
- Sales: The goods should not be included in sales because they have not actually been delivered to the buyer. The sale is only recorded for accounting purposes, but the goods are still with the seller.
- Closing Stock: Since these goods are unsold and still in the godown, they will be considered part of the closing stock in the balance sheet, representing inventory that the business still holds.
- Goods in Transit: This term refers to goods that are on their way to the buyer but have not yet arrived. In this case, the goods are not in transit as they are still at the seller's location.
- Sales Return: This option does not apply here since the goods have not been returned; they simply remain unsold at the buyer's risk.
Thus, the appropriate treatment of these goods is to classify them as part of closing stock.
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Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer?
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Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer?.
Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Sales for the year ended 31st March, 2005 amounted to Rs. 10,00,000. Sales included goods sold to Mr. A for Rs. 50,000 at a profit of 20% on cost. Such goods are still lying in the godown at the buyer’s risk. Therefore, such goods should be treated as part ofa)Closing stock.b)Sales.c)Goods in transit. d)Sales return.Correct answer is option 'A'. Can you explain this answer?.
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