What should be counted as purchase for a recruitment agency?

Please could anyone help with this question?

A recruitment agency will incur some subscription fees to various websites to search online for job and candidate, I thought these should be count as expenses. If money from finding a work replacement is main income, what should count as purchase?

Many thanks for your attention,

Hong

Comments

  • hong_bianhong_bian Posts: 15Registered
    Many thanks for the comment and Sorry for the confusion. here is the case study:

    a recruitment agency made sales £10,000 by finding a work replacement for a client,

    Costs to the agency:
    trade subscription (to be able to search information): £3000
    Rent: £200
    Staff salary: £2000
    Phone:£50
    Travelling and subsistence: £500

    When come to do P&L

    Sale: £10,000
    Purchase: ?
    Gross profit: ?
    expenses: £5750
    Net profit: ?

    I don't know what should be counted as purchase. The trade subscriptions are to facebook, linkedin and other job hunting related website or company. I don't think it should counted as purchase. but then what should be or there's no purchase at all?
  • NeillawNeillaw New Member RossendalePosts: 242MAAT, AAT Licensed Accountant
    Wouldn't you be better using an income and expenditure account.
    I would only use purchases, gross profit when goods are traded i.e manufactured or resold.
    If you really want to use a trading account then staff salary would be the item to fit as your purchase figure.
  • hong_bianhong_bian Posts: 15Registered
    Thanks for the comment, Neil. I was thinking about drawing up a profit and loss accounts for a limited service company. Like research and development cost, if the final product could be realised in a value, the cost can be counted as purchase. I thought that it can be similar if a service company can group costs to a successful replacement as purchase cost. If this is correct, then the cost of interview a replacement candidate in a café can be counted as purchase cost rather than non-allowable expenses of business entertainment.

    A service company probably don't need to have purchase at all and it's only me here making everything too complicated :)




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