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  Inter Company Trading

Introduction to Inter-Company Trading

As we described a little earlier in the section, it is very general for members of the group to trade with one another. So far as each member of the group is regarded to such trading should be dealt along with in the accounting records, including the income statement, in precisely the same way like trading with any other party. While we come to the group income statement, though, inter-company trading among group members must be eliminated. It is in the strength of group accounting that the group income statement should only identify trading with parties outside of the group, because if the group were one single business. Just sales to outsiders should be imitated in the group sales revenue figure; only purchases of goods and services from parties outside of the group should be imitated.

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