Sales Tax Instructions

Sales Tax Instructions, 2009
Stock turnover rate
Another important ratio is stock turnover ratio. A business is a function of two factors:-
The difference between the buying and selling process (the gross margin).
The number of times the margin is achieved (the rate of stock turnover).
Thus the rate of stock turnover gives an indication of the efficiency of the business in
turning over its stock during the accounting period.
The rate of stock turnover may be expressed as;
Cost of goods sold
Average stock
In the example against profit percentage above, stock turnover can be seen to be 2003 =
8.8 time, 2002 = 9.2 times. A reduction in the rates of stock turnover may be caused by;
Stock manipulation is one of the most popular methods used to dress-up accounts.
Errors in stocktaking-deliberate overvaluation of closing stock in order to maintain the
profit for the year.
―Sales commission as percentage‖
Establish rate of commission per line/area etc. Apply rate paid or earned to establish
sales.
―Issue from stock‖
Establish issues from the stock. Obtain selling price of issue and calculate the sales (price
x issues).
―Contracts for sale‖
Calculate sales from contracts.
―Purchase costs as a percentage of sales‖
Establish mark up per line of sales. Apply mark up to purchases as adjusted for stock
holdings.
Formula Gross profit x 100
Purchases
―Delivery records list, the goods removed‖
Obtain delivery records, vehicles, goods delivery notes etc. Apply sample delivery to
invoices to trace to account all deliveries should be accounted for.