[ACYCST1] Accounting for Materials

Material Requisition

a written order to the storekeeper to deliver materials and supplies to the place designation or to issue the materials to the person presenting a properly executed requisition

1. Quantity

2. Material number

3. Job number

Data from Material requisition

Purchase Requisition

a written request, usually sent to inform the purchasing department for materials and supplies

Purchase Order

a written request to a supplier for specified goods at an agreed upon price

Purchase Order

the supplier’s authorization to deliver goods and submit a bill.

Purchase Order

stipulates the terms of delivery and terms of payment

Receiving Report

when the goods that were ordered are delivered, the receiving department will unpack and count them

Quantity Discounts

represent cost savings for volume purchases

Quantity Discounts

discounts that are not given explicit accounting recognition in the books

Cash discounts

granted to customers to motivate them to pay promptly

When taken method

purchases and liabilities are recorded at gross amounts at the time of purchase

When taken method

the discount is only recognized when the account is paid within the discount period

When not taken method

purchase and liabilities are recorded at net at the time of purchase

When not taken method

when payment is made after the lapse of the discount period, the discount not availed of is charged to a “material“ account

Direct Charging

the freight incurred on the purchase of raw materials is ADDED to the invoice price

Relative peso value method

freight is allocated on the basis of the peso value of the times purchased

Relative weight method

freight is allocated on the basis of the weight of the items purchased

Indirect Charging

the freight incurred on the purchase of raw materials is charged to Factory Overhead Control Account

Spoilage

refers to units of production—whether fully or partially completed—that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices

Rework

refers to units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units

Scrap

residual material that results from manufacturing a product

Abnormal loss

charged as an expense to accurately reflect the incurred expenses associated with the avoidable wastage occurring during the production process, thus ensuring transparency in financial reporting and adherence to accounting principles.

Job cost sheet

serves as the primary accounting document utilized for allocating costs to specific jobs within a manufacturing environmen

Raw Materials Inventory

serves as a control account, overseeing the flow of raw materials into and out of the inventory system, ensuring accuracy and accountability in material usage