What should be counted as purchase for a recruitment agency?

hong_bian

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

hong_bian

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?

Neillaw

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_bian

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