My company trades goods, but we have two different situations:
- Some of our vendors give us the revenue and then we pay to our suppliers the costs.
- Some of our vendors only give us the profit and directly transfer the costs to the supplier.
My question is how can we best account for these two different situations?
The first situation is clear to me, we register costs of goods sold and we register revenue.
The second situation we could either:
a. register only the profit as revenue and no costs of goods sold. But this would give our financial statements not the correct information to calculate our margin.
b. register both the cost of goods sold and the revenue, even though we didn't pay it or receive it. This would make it easy to calculate margin.
We then reconcile part of the accounts payable with the accounts receivable. So the accounts payable would only show the profit.
- Some of our vendors give us the revenue and then we pay to our suppliers the costs.
- Some of our vendors only give us the profit and directly transfer the costs to the supplier.
My question is how can we best account for these two different situations?
The first situation is clear to me, we register costs of goods sold and we register revenue.
The second situation we could either:
a. register only the profit as revenue and no costs of goods sold. But this would give our financial statements not the correct information to calculate our margin.
b. register both the cost of goods sold and the revenue, even though we didn't pay it or receive it. This would make it easy to calculate margin.
We then reconcile part of the accounts payable with the accounts receivable. So the accounts payable would only show the profit.