# Competitive Exams: Cost Accounting (Part 1 of 2)

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At what rate will we calculate closing stock?

Accounting is very interesting subject. Simplicity is not the feature of accounting. Different complex problems, you will face in the field of accounting. Today, I am telling you about valuation of stock. Because businessmen buy different stock at different time at different cost. But when we will show our closing stock, we will face this problem. There have many rates at which we charge our cost of closing stock but I am giving you solution of this problem very simply

Suppose Rajpura alcon company buys raw material of wire at different cost but we this company records closing stock of this raw material, this company can use first in first out method for calculation of closing stock. This method is also called fifo. It means that the stock which bought first, it sent for sale first so last stock cost will the rate for calculating closing stock. There is another method last in first out or average cost method. I always suggests businessmen and accountant to use average cost method for calculating closing stock.

## Introduction of Inventory Management

Inventory management is main duty of an accountant of any company. He is responsible both quantity and monetary record of all the material in which company deals. We know that trader buys the goods and sometime he returns to his suppliers. He also sells the goods and some time his customers return him his goods. So, Inventory will convert from buying to selling step by step. Accountant have to give the reports

• What is total amount and quantity of goods purchased and sold of different kind.

• What is value and quantity of total closing stock. Quotation is just proposal for sale. It is not sale but offer of sale given by seller to the buyer of goods. When any company want to buy with minimum cost he publish tender for that buying if any body sends offer for sale with his selling rates, discount rate, delivery time and other such term and condition then that statement is called Quotation. We can divide terms and condition of quotation in following way

• Taxes

• Prices, releases and set off

• Delivery

• Quantities

• Term and method of payment

• Contingencies and force majeure

• Legal compliance

• Warranty conditions

• Patent conditions

• Termination and cancellation

• Inspection, size and Tolerance

• Release of Information

## Delivery Note and Invoice

Delivery note is issued when goods physically delivered by seller to buyer. Its other name is delivery challan. But Invoice is just description of credit sale.

Accountant can prepare both Invoice-cum-Delivery note at the time of delivery.

There for to complete the sale transaction, the seller

• Delivers goods against order or without order (where order does not exist)

• Prepares delivery note or sales invoice (Bill-cum-delivery note)

• Prepares sales invoice linking the delivery note where sales invoice was not prepared at the time of delivery.

## Debit Note

When A business organisation purchases the goods from other business organisation. Some goods out of them can be rejected by a business organisation to other. At this time for recording the purchase return, there is two method of making the voucher of this record

• Ist Method: We wait our supplier, when he accepts our rejected goods and send us credit note. This credit note will be the debit note for our purchase return entry. With this purchase return entry our stock will reduce with the amount of goods return outward. We make voucher Entry in Debit Note in tally 9
• 2nd Method: In this we issue the debit note with return goods and pass the voucher entry of purchase return in debit note.

### Steps of voucher entry in tally 9

• 1st Step: Yes the feature of debit and credit note
• 2nd Step: Create the Ledger of Purchase return under the head of purchase
• 3rd Step: Pass the voucher entry of purchase return in debit note voucher of tally 9

## Credit Note

When A business organisation sells the goods to other business organisation. Some goods out of them can be rejected by other business organisation. At this time for recording the sale return, there is two method of making the voucher of this record

• Ist Method: We wait our customer, when he send us Debit note. This Debit note will be the Credit note for our Sale return entry. With this Sale return entry our stock will increase with the amount of goods return inward.
• and We make voucher Entry in Credit Note in tally 9
• 2nd Method: In this we issue the credit note as we accept rejected goods and pass the voucher entry of Sale return in Credit note.

### Steps of voucher entry in tally 9

• 1st Step: Yes the feature of debit and credit note
• 2nd Step: Create the Ledger of Sale return under the head of Sale
• 3rd Step: Pass the voucher entry of Sale return in Credit note voucher of tally 9