product cost accumulation systems

The flow of costs to ledger accounts is based on source or transaction documents, which must be checked, verified, and vouch red before they are journalized and posted. These documents are the fundamental evidence of an accounting event. Some of the typical source documents which support transactions involving the elements of manufacturing cost are identified in the following table

            Cost

Source Document

Materials

Purchase invoices, materials requisitions, material returned slips. etc.

Labour

Time tickets or time sheets, clock cards, job tickets, etc.

Factory overhead

Vouchers prepared to set up depreciation or prepaid expenses, vendors invoices, utility bills, time sheets, etc.

The flow of accounting information from source document to ledger accounts may be facilitated by using the journal voucher control system. Whether manual or computerized, this system involves the use of journal vouchers on which information from the source documents is summarized and identified according to the chart of accounts. The journal voucher is the basis for the preparation of journal entries which record the transactions for a given period and the posting of these transactions to the ledger accounts. The journal voucher should indicate the voucher number, the date, the accounts with their members or codes, the amounts to be debited or credited, and approval. Columns may be added to accommodate the subsidiary ledger details, or these details may be posted directly from the source documents.

Download Files

cm-lec3.ppt (0.26 MB )