Discover the Best Tax Invoice Example for Purchasing

Tax invoice example for Purchasing

this isan and in this session we will see the general entries for purchase and sale of an item if there is vet or if there isn't any vet first we will see without V okay suppose you have purchased an inventory item for 1,000 so what will be the general entry it is very simple you will just debit inventory and credit what account payable cash or bank so why this account payable is being Creed if you are purchasing on uh credit this is your liability and increase in liability is if there is increase in liability what will happen it will be credit and why I'm debiting this amount increase in asset is your debit and if we uh have purchased this on bank or cash or then then why we are crediting then this means that we are decreasing our asset and decrease in asset is what credit okay so these are the reason for this purchase debit and credit now let's do the general entry for sale so when we will make the general entry for sale cash or bank will be debit because this is our asset and increase in asset is debit and what will be credit Revenue will be credit why because increase in revenue is credit so that is the reason for debit and credit of this okay we'll make one more entry if you see we have sold this this item for 15,000 so this item needs to be removed from inventory so what happens is now we have we inventory account is gone inventory from inventory account this amount cost of good sold amount is gone for this asset so inventory asset has decreased so decrease and asset is credit and what is debit cost of good sold is debit because we have to charge this to pnl okay so to record the expense so increase in expenses debit so that that is the reason for this so these are the general entry for uh sale and purchase of items without vet now let's consider if there is vet what will be the general entries okay so let's see once we will purchase the item what we will do we will debit inventory asset account the same reason asset has been increased and we will also debit vet input because this V input is your you can say it as an asset or this is your Contra liability this is this is reducing your liability so once there is decrease in liability then it is debit either you either way you you have to debit it so we are debiting that input due to the two reasons either it is your refund then it is an asset or it is reducing your V total liability so once there's decrease in liability then it is also debit that is why we call it Contra liability as well and what is what is the credit amount the credit amount is if it is if it is Cash sales cash purchase then cash or bank will be credit because this is your asset for this has been reduced so that is why credit or if you have purchased it on credit then this is your liability and increase in liability is also credit okay all right now let's what will be the general entry if we will sell these item so what will happen when we will sell it either we will sell it on Bank on cash or if we will sell on credit okay if we sell it on credit what will happen cash will increase or bank will increase with the total amount of sale plus the vet amount okay so total amount has increased with this amount so increase an asset will is debit so this asset can be cash or bank or account receivable okay and similarly if you see over here that now what will be the credit this was the debit amount okay now what will be the credit your Revenue has increased with 1,500 keep in mind your Revenue has increased with 1,500 not 1,575 this is your Revenue increase in revenue is credit and also V output is your liability and increase in liability is what credit so that is why it is being credited okay and similarly you have to transfer this amount to cost of good sold the the amount of inventory so this 1,000 you will transfer to cost of good sold because this has been removed or it has been gone from your inventory asset so your inventory asset has been reduced with this cost value value so what will happen your inventory asset will be reduced so it is credit and what will be the debit cost of goods sold expense will be debit so this will you will charge this to your your pnl so this entry will also be done so these are the general entries for sale and purchase with vet and without vet let's disintegrate this entry and see how this entry works let me let us see it in in in a more uh deep way okay so all the entries are done if you are interested to see it in a more deep way just you can continue otherwise it's okay we have done the general entries okay now let me see it in in a in a bit more detail okay if you see over here this 1,000 the cash that you have received 1575 this has 1,000 then 500 and then 75 three kind of this this is the mixture of three kind of amount so okay that is why I told you it is a bit of deep dig so you you have to this core is this a core concept so this 1,000 was what worth of your inventory okay this 500 is your GP gross profit and 75 is what 75 is what your vet output so this this is how this total amount is being coming over here okay one more thing that I want to discuss with you is this Revenue has two parts your this Revenue has two parts okay what are there I think you know 1 1,000 and 500 this Revenue has to part this just for the sake of understanding I'm doing this okay just if if you will disintegrate it or if you will dig deep you will see it okay so this is what cost of asset Cost Plus what G g p gross profit that you have charged what is the cost 100 1,000 and what is the GP 500 so this is how it is being you know the the the reason or you can say that if you want if if you are just uh interested into zoom in and see more detailed thing this is the constitute of three values it has your inventory Cost Plus GP plus vet and this this amount your Revenue the amount that you are getting for the sale amount is of what 1,000 is for what 1,000 is for the cost and 500 is for GP okay so once you will make the profit and loss account you will minus this 1,500 you will minus this one 1,000 from this 1500 this is your revenue and you will get this 500 okay so that was the just deep dig down for you so I hope you like this video please click the Subscribe button for me share it with your friends thank you