Inefficiencies in production are in reality treated differently. There are companies who don’t even know that they’re being inefficient, there are companies who consider inefficiencies as a part of the everyday process and those who treat inefficiencies as something very serious and fight against them. Continue reading
Category Archives: 1.03 Inventory
Reporting inventories on statement of cash flows
Reporting your inventories on statement of cash flows is virtually always done under operating activities cash flows. When you think about it, what are operating cash flows in essence? They’re meant to show the flows your business is able to generate from its operations, from its day-to-day activities. So it’s safe to say that inventories are something that fall under this category pretty clearly. Continue reading
Accounting when producing
Accounting entries when you’re dealing with producing your goods are something that needs to be similar throughout. You have to have specific and pretty detailed accounting laid out – accounts, procedures and controls for measurement (i.e. to measure your own cost per unit). Continue reading
Producing
When we’re talking about goods, we can either talk about purchasing or producing them. Purchasing is a process where you buy something and resell the item to your customer with adding no or little value to the item. Producing however means that you buy materials and your produce an item out of those materials buy putting them together, changing them into specified forms etc. Continue reading
Supplier bonuses, rebates and whatnot as a part of inventory
Supplier bonuses, supplier rebates and so on, are more common than you might imagine and getting them for your company and for your purchases is all down to your negotiation skills.
Regardless however, we would like to focus on treating such items on your financial statements. Continue reading
Transportation and handling
Unless you’re bringing the goods to your premises by foot, that is by your own foot, you’re bound to encounter some sort of transportation expenses – whether it’s someone else’s service you’re using or your own transportation which depreciates and uses fuels, thus creating expenses. The same way you’re likely to encounter handling expenses when storage spaces are used in-between transports or the goods require special treatment (i.e. special packaging). Continue reading
Non-refundable taxes and duties
As you purchase goods, whether they’re materials or finished items, you’re paying for various things – the base price of the item, possible enhancements made, taxes on import, purchase etc., transportation and handling, and not to forget, possible rebates or reduction in prices as well. Continue reading