![]() The Central Sales Tax Act, 1956 defines “Turnover” as follows: This clearly shows that the definition of turnover is no where connected with only the aggregate value of realisation of amount made by the company. The term gross turnover’ and `net turnover’ (or `gross sales’ and `net sales’) are sometimes used to distinguish the sales aggregate before and after deduction of returns and trade discounts”.Ī careful reading of these above mentioned pronouncements will bring to limelight the very crucial in between expression “ …….are effected………by the company/ enterprise”. “The aggregate amount for which sales are effected or services rendered by an enterprise. In the “Guidance Note on Terms Used in Financial Statements” published by the Institute, the expression “Sales Turnover” has been defined as under:. Where excise duty is included in turnover, the corresponding amount should be distinctly shown as a debit item in the profit and loss account.” Adjustments which do not relate to turnover should not be made e.g. The term ‘turnover’ would mean the total sales after deducting therefrom goods returned, price adjustments, trade discount and cancellation of bills for the period of audit, if any. “Total turnover, that is, the aggregate amount for which sales are effected by the company, giving the amount of sales in respect of each class of goods dealt with by the company and indicating the quantities of such sales for each class separately. The term “turnover” is a commercial term and it should be construed in accordance with the method of accounting regularly employed by the company.įurther, the Guide to Company Audit issued by the Institute in the year 1980, while discussing “sales”, stated as follows: In an agency relationship, turnover is the amount of commission earned by the agent and not the aggregate amount for which sales are effected or services are rendered. It may be noted that the “sales effected” would include sale of goods as well as services rendered by the company. Part II of Schedule VI to the Act, however, defines the term “turnover” as the aggregate amount for which sales are effected by the company. The term, “turnover”, has not been defined by the Order. The Statement on the Companies (Auditors’ Report) Order, 2003 issued by the Institute in April 2004, while discussing the term ‘turnover’ in paragraph 23 states `as follows: Part II of Old Schedule VI to the 1956 Act, defined the term “turnover” as the aggregate amount for which sales are effected by the company. Let’s peruse the definition contained in these frameworks one by one. Meaning of Turnover – pre Companies Act, 2013:īefore the enactment of the Companies Act, 2013, the expression turnover was used to be defined in Old Schedule VI, and also used to be discussed in Guide to Company Audit issued by the Institute of Chartered Accountants of India (ICAI) in the year 1980, Guidance Note on Terms Used in Financial Statements, and Statement on the Companies (Auditors’ Report) Order, 2003. The present article discusses the issue in detail in the succeeding paragraphs.ġ. This definition has used the words “aggregate value of the realisation of amount made” instead of “aggregate value of the realisation of amount made or to be made” and thus has placed a question as to whether such a definition is a trajectory towards cash basis of accounting. Section 2(91) of the Companies Act, 2013 defines “turnover” to mean the aggregate value of the realisation of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |