Professional Documents
Culture Documents
e characteristics of a partnership, prepare the financial statements of a partnership and account for the changes in a partnership including the dissolution of a partnership Explain autonomous local branches and record the transactions and prepare financial statements for selling agencies and autonomous local branch Describe the nature of hire purchase transactions and show how they are accounted for in both the buyers and sellers books. Explain the conceptual foundation of non-profit organization, and preparation of related accounts
At the end of the course, students should be able to: Explain cost elements, cost classification structure of manufacturing account, manufacturing profits, provision for unrealized profit and WIP valuation Understand types of partnership, identify simple partnership, changes and dissolution in partnership Enable the preparation of related accounts to partnership and final accounts of partnership Explain the branch accounting, characteristics of branch and preparation of current account, income statement in columnar form and combined balance sheet. Explain the different between business enterprise and non-profit organization, in terms of conceptual foundation, preparation of related accounts and incomplete records.
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5.
Manufacturing accounts Partnership Branch accounting Accounting for hire purchase transactions Accounting for clubs and non-profit organizations
Distinguish between manufacturing and trading business Identify the elements of costs, classify into direct and indirect cost Prepare manufacturing account, income statement and balance sheet Calculate manufacturing profits, provision for unrealised profit. Discuss on WIP valuation and its treatment in the manufacturing account.
Manufacturing business:
Converting raw materials, together with other costs into finished goods
Direct
material
Major and important part of prime cost. Ex: rubber in the making of tyre.
Direct
labor
Wages/ salaries paid to workers employed directly in the process. Ex: salaries to factory operators or machine operator
Direct
expenses
Expenses directly related to the process. Ex: royalties, hire/ rent of special machine
The
opening and closing materials must be taken into account when calculating the cost of material other cost incurred in the purchase of raw material (ex: duty, freight and insurance) should be added to the purchase cost of raw material
Any
Example: Opening stock Purchase of raw material 8,000 Carriage inward 200 Less: closing stock 12,000
Indirect
material
Indirect
labor
Indirect
expenses
Total cost
Production cost
Prime costs
Production costs
Direct materials
Indirect materials
Direct labor
Indirect labor
Direct expenses
Indirect expenses
It
Occurs
when:
Finished goods transferred to the trading account is at cost plus mark-up Closing stock of finished goods is actually closing stock of the self-manufactured goods
Why
it need to be determined?
The stock has not yet being sold,profit should not be recognised yet To comply with conservatism/ prudence concept Stock may tend to be overstated
Example: Opening stock RM1,100 (at market price) Closing stock RM2,200 (at market price) Finished goods transferred to trading account at cost plus 10% Answer: Unrealised profit on opening stock = 10/110 x RM1,1000 = RM100 Unrealised profit on closing stock = 10/110 x RM2,200 = RM200
There
is an increase of RM100 (expense) Provision for unrealised profit Balance b/d 100
Balance c/d
100
200