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Cost System Types in Accounting Flashcards

Cost System Types in Accounting Flashcards
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Job Order Costing: Journal
Companies use this book to record financial transactions made in job order costing. It tells us how much money is located in different accounts.
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Job Order Costing
This system allows a business to monitor costs for specific jobs. It can be useful, but is complicated and may lead to an inaccurate predetermined overhead rate.
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Manufacturing Business: Job Order Costing System Accounts
Businesses of this type typically name accounts after materials or goods, instead of focusing on service.
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Service Business: Job Order Costing System Accounts
This kind of business will use account names that draw on the fact that they offer services to customers. This may include accounts related to customer contracts.
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Job Cost Sheet
A financial document that records the costs a company has to pay for a specific job.
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Finished Goods Inventory: Formula
Past finished goods inventory + purchases for inventory deductions for inventory = current finished goods inventory
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Finished Goods Inventory
How much stock a company has on hand to fill orders for customers or wholesale accounts.
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Cost of Goods: Service Business
These businesses do not produce products. Their cost of goods is related to the wages employees are paid to care for customers.
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Cost of Goods: Manufacturing Business
The price of raw materials and other components necessary to create products make up the cost of goods for these companies.
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Cost of Goods: Retail Business
The cost of goods for these business cover the price to buy inventory and to transport it to stores. Paying employees to sell products (commissions) would also be one of these costs.
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Cost of Goods
Companies accrue these expenses in the process of creating their product or service. They vary depending on a business's type.
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Balance Sheet
This financial statement records information about a company's assets, retained earnings and liabilities. It allows businesses to record transactions.
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25 cards in set

Flashcard Content Overview

Working with these flashcards can help you go over the job order costing and equivalent units. You'll also be able to consider work-in-progress inventory and issues with manufacturing overhead. The purposes of the balance sheet and the job cost sheet are also covered by these flashcards. Additionally, you can review how manufacturing, service and retail industries calculate the cost of their goods.

Front
Back
Balance Sheet
This financial statement records information about a company's assets, retained earnings and liabilities. It allows businesses to record transactions.
Cost of Goods
Companies accrue these expenses in the process of creating their product or service. They vary depending on a business's type.
Cost of Goods: Retail Business
The cost of goods for these business cover the price to buy inventory and to transport it to stores. Paying employees to sell products (commissions) would also be one of these costs.
Cost of Goods: Manufacturing Business
The price of raw materials and other components necessary to create products make up the cost of goods for these companies.
Cost of Goods: Service Business
These businesses do not produce products. Their cost of goods is related to the wages employees are paid to care for customers.
Finished Goods Inventory
How much stock a company has on hand to fill orders for customers or wholesale accounts.
Finished Goods Inventory: Formula
Past finished goods inventory + purchases for inventory deductions for inventory = current finished goods inventory
Job Cost Sheet
A financial document that records the costs a company has to pay for a specific job.
Service Business: Job Order Costing System Accounts
This kind of business will use account names that draw on the fact that they offer services to customers. This may include accounts related to customer contracts.
Manufacturing Business: Job Order Costing System Accounts
Businesses of this type typically name accounts after materials or goods, instead of focusing on service.
Job Order Costing
This system allows a business to monitor costs for specific jobs. It can be useful, but is complicated and may lead to an inaccurate predetermined overhead rate.
Job Order Costing: Journal
Companies use this book to record financial transactions made in job order costing. It tells us how much money is located in different accounts.
Under- or Over-Applied Manufacturing Overhead: Precise Reconciliation
If your company has this issue with overhead, you can take extra time and divide the difference into various accounts, including finished goods, cost of goods sold and work in progress.
Under- or Over-Applied Manufacturing Overhead: Quick Reconciliation
Companies that need to reconcile overhead quickly and that aren't concerned with accuracy can use one account to record all overhead.
Work-in-Progress (WIP) Inventory Account
Businesses use this asset account to monitor the cost of products that have been partially completed.
Work-in-Progress (WIP) Inventory Account: Formula
Previous balance + direct material + direct labor + overhead - value of completed product (estimated) = work in progress inventory balance. All debits are negative numbers.
Cost of Goods Sold
Businesses use this record to track how much money they spent to make products that they sold to customers.
Cost of Goods Sold: Formula
Amount of products produced x cost to produce individual product = cost of goods sold.
Cost Driver
These occur when a business's costs change.
Equivalent Unit Metric
A tool that allows companies to look at their inventory-in-progress and determine how many products they could have finished completely with full processing costs.
Equivalent Unit: Formula
Total equivalent units = completed products + units-in-progress x percent of completion
FIFO: Cost per Equivalent Unit Formula
Cost per equivalent unit = (Cost for completed goods + cost for nearly completed goods) / Total equivalent units
Production Report: Cost Accounted For
This section on a production report records the cost for products that have been have moved out of a department.
Production Cost Report
A report that looks at inventory and a company's equivalent units. It can help a company determine how much money is being used at different stages of production.
Transferred-In Costs
Costs that follow a product to multiple departments through the production process. These costs are added to at each new department.

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