at the time of GR system debits the stock account (BSX)
AND make a offsetting entry at the GR/ir clearing account
my query is why the sytem debits the STOCK ACCOUNT rather it should credit the stock account because we have procured the material and our stock and value of stock increases
what do u understand by offsetting entery
2 Answers
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Best Answer
Former MemberPosted on Jan 05, 2008 at 02:55 PMHi
How do you say the stock has to be credited?
When the stock comes into the company it is an asset and it will result in the increase of asset so it has to be debited.
If it gets credited it will result in decrease of stock or it will be a liability.
I hope you remember the 3 golden rules of accounting....
1) Debit what comes in and
Credit what goes out.
2) Debit all expenses and losses and
Credit all incomes and Gains
3) Debit the receiver and
Credit the giver.
The accounting entries gets passed into the books of accounts only based on these rules.
Hope it helps
Good Luck
Hari
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Former MemberPosted on Jan 05, 2008 at 06:42 AM
hi,
the process is like this
PO - there is no financial entry
GRIR - Stock Dr
GR/IR Cr
MIGO - GR/IR Dr
Vendor Cr
Consumption posting - Consumption Dr
Stock Cr
So GR/Ir is the offsetting entry. Once you procured the material that will come under stock (i.e asset to the company) and then whenever you are utilising the materials(i.e consumption) then only it will happen the expenses. Because you will not utilise the entire quantity for production. So some stocks will be lying in stores.
Actual utilisation is the expenses, otherwise it is asset to the company.
govind.
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