56. There is purchaseProsol.6. "There is no need to find out the balan

1.	56. There is purchaseProsol.6. "There is no need to find out the balance of goods sold accountand goods purchases account Pwhy?We
Answer» The physical magnitude and the value of the product is immaterial in deciding whether it should be considered as goods/stock or not. A product that seems to be an asset in the general context might be stock for a business organisation. Examples For an organisation in the business of making and selling aircrafts, aircrafts form goods. But for any other organisation an Aircraft would be an Asset (even for organisations in the business of transportation or travel). For an organisation buying and selling Motor Cars (a motor car dealer), motor cars would form goods or stock. But for any other organisation Motor Car would be an Asset. A product that is treated as an asset in one organisation may form goods in another.

56. There is purchaseProsol.6. "There is no need to find out the balance of goods sold accountand goods purchases account Pwhy?We

Answer»

The physical magnitude and the value of the product is immaterial in deciding whether it should be considered as goods/stock or not. A product that seems to be an asset in the general context might be stock for a business organisation.

Examples

For an organisation in the business of making and selling aircrafts, aircrafts form goods.

But for any other organisation an Aircraft would be an Asset (even for organisations in the business of transportation or travel).

For an organisation buying and selling Motor Cars (a motor car dealer), motor cars would form goods or stock.

But for any other organisation Motor Car would be an Asset.

A product that is treated as an asset in one organisation may form goods in another.

Discussion

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