ACCOUNTING TEATMENT FOR DETACTION OF STOCK VARIANCE BY GST DEPARTMENT

[CABIJENDERKUMAR BANSAL]

hello,

there was search and seizure by GST department for XYZ limited premises. they found physical inventory is not matched with books inventory. physical stock was less then books inventory by ₹ 3 crore and they raised demand for GST , interest , penalty . assesses accept it and paid all dues as per demand.

now query is what is accounting treatment in the books of XYZ ltd for stock to be decrease by ₹ 3 crore.

now

AI Summary

XYZ Limited faces GST demand after search reveals 3 crore stock discrepancy; revaluation impacts Profit & Loss. XYZ Limited underwent a search and seizure by the GST department, revealing a discrepancy of 3 crore between the physical inventory and the inventory recorded in the books, with the physical stock being less. Consequently, a demand for GST, interest, and penalty was raised, which the company accepted and paid. The query concerns the accounting treatment for this stock variance. The suggested approach is to revalue the stock by making an entry in the general ledger, debiting the Stock Revaluation Account and crediting the Stock of Raw Materials/Finished Goods/Work in Progress, with the revaluation charged as an expense in the Profit & Loss Statement.