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These are two different methods of accounting that are used in different circumstances and situations. The equity method of accounting is used when the influence and control of the firm…
Product cost -includes costs incurred- for manufacturing or for purchasing goods. In case of manufacturing business product cost consists of direct materials, direct labour and factory overhead. In case of…
Purchase of Supplies, Services, and Repairs: Learning Objective of the article: Explain the procedure of Purchasing supplies, services and repairs. The procedure followed in purchasing productive materials should apply to…
Purchase of Productive Materials: Learning Objective: Explain the procedure of purchasing productive materials. The actual purchase of all materials is usually made by the purchasing department headed by a general…
Storage and Use of Materials: Materials, together with copy of the receiving report, or forwarded to the storeroom from the receiving or inspection department. The storekeeper and assistants are responsible…
Materials Purchasing Forms: The principle forms required in purchasing are the purchase requisition form and the purchase order form. Purchase Requisition Form: The purchase requisition originates with (1) stores or…
Transfer of Materials Cost to Finished Production--Inventory Valuation: The ultimate, intended destination of direct materials is finished products or finished goods delivered to customers. The cost of materials used on…
Requirements of a System of Materials Control: The important requirements or essentials of adequate satisfactory system of materials control are as follows: Proper Coordination Competent Purchasing Agent Use of Standard…
Cost Accounting Procedure for Spoiled Goods: Cost accounting should provide product costs and cost control information. In the case of spoilage, the first requirement is to know the nature and…
Re-order Level or Ordering Point or Ordering Level: Definition and explanation of re-order point Formula of re-order level or ordering point Examples Definition and explanation: This is that level of…
Receiving Materials: The function of the receiving department is to: unload and unpack incoming materials; check quantities received against the shippers packing list; identify goods received with descriptions on the…
Cost Accounting Procedure for Scrap and Waste: (Scrap Accounting) In many manufacturing processes, waste and scrap result from: The processing of materials. Defective and broken parts. Absolute stock. Revisions or…
Physical Inventory - Inventory Valuation: Even with a perpetual inventory system, periodic physical counts are necessary to discover and eliminate description between the actual count and the balances on materials…
Other Materials Costing Methods - Month End Average Cost | Market Price at Date of Issue | Standard Cost: Although first in first out (FIFO), average cost, and last in…
Minimum Limit or Minimum Level of Stock: Learning Objective: Definite and explain minimum limit or minimum level of stock. How is minimum limit or minimum level calculated? Definition and Explanation:…
Maximum Level or Maximum Limit of Stock: Learning Objective: Definite and explain maximum limit or maximum level of stock. How is maximum limit or maximum level calculated? Definition and Explanation:…
Materials Ledger Card--Perpetual Inventory: As purchased materials go through the systematic verification of quantities, prices, physical condition, and other checks, the crux of the accounting procedure is to establish a…
Last In First Out (LIFO) - Materials and Inventory Costing Method: Learning Objectives: Define and explain last in first out (LIFO) method. Give an example of LIFO costing method What…
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