PRC-1 · Chapter 7 · Question 50 of 100
A business owner takes goods costing Rs. 5,000 from the business for personal use. The goods have a retail price of Rs. 7,000. Under a periodic system, what is the double entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Drawings Rs. 5,000; Credit Purchases Rs. 5,000
Explanation
Drawings of goods for personal use are recorded at cost, not retail price. In a periodic system, the cost of goods drawn is removed from the Purchases account to prevent it from inflating the Cost of Sales.
More IAS 2: Inventories MCQs
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- Q55How must the cost of abnormal wastage of materials and labor be treated under IAS 2?
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