Goods in Transit

1. Use of Goods in Business:

The goods which have been purchased by the trader in order to run the business efficiently and brought into the firm for use by the business are known to be the goods for use in business....

2. Manager’s Commission:

The manager may be paid a commission due to an increase in sales of the business. This commission is paid on the net profit of the company. There can be two instances i.e. it can be paid before or after charging a commission....

3. Deferred Revenue Expenditure:

Deferred revenue expenditure means the expenditure, the benefit of which is accrued in more than one accounting period. In other words, it means that the expense that has been incurred at once, its benefit shall be received in the coming years as well. If the whole expense is debited in the current year, it may lead to an underestimation of the profit of the business and the balance sheet may not depict the correct financial position of the business. So, this expense is distributed over the different years in terms of the benefit that are estimated to be received every year....

4. Contingent Liability:

Contingent Liability is the liability that may or may not arise in the future. It is not recorded on the Liabilities side of the Balance Sheet but is shown in Notes to Accounts. For example, order of the court....

5. Sale of Goods on Sale or Return Basis:

Sale of goods may be made on a sale or return basis. This sale should not be recorded as an actual sale until the customer gives his approval of acceptance. In case the goods sent to customers have been recorded as an actual sale, an adjusting entry has to be passed to nullify the effect that has taken place i.e. it will be recorded as an inventory lying with the customers at the end of the year....

6. Goods in Transit:

When the goods are sent or dispatched by the supplier but not received by the business till the end of the year, these goods are recorded as goods in transit....