Goods are the other name of inventory. These are the products in which company deals. All trading companies buy goods at lower cost and sell at higher price for earning profit. But all manufacturing companies buy raw material or goods and produce in factory. After packing these goods, these are sold in market.
Accounting Treatment of Goods
1. When goods are bought, it will become the asset of company and a purchase account is opened in the books of company. If goods are bought on credit, then creditors of company will increase.
2. Goods under production is also assets of company.
3. Goods which are sold means reduction of current assets and we have to calculate its cost for calculating the value of gross profit.
Accounting Treatment of Goods
1. When goods are bought, it will become the asset of company and a purchase account is opened in the books of company. If goods are bought on credit, then creditors of company will increase.
2. Goods under production is also assets of company.
3. Goods which are sold means reduction of current assets and we have to calculate its cost for calculating the value of gross profit.
