Basic Accounting Lectures » Job Order Costing

General Ledger Factory Ledger Part 3

admin — Thu, 08 Oct 2009 09:40:37 +0000

This is part 3 of the topic “General and Factory Ledger”. To see part 1 click here, and for part 2 click here.

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General Ledger & Factory Ledger

admin — Thu, 08 Oct 2009 09:13:06 +0000

The topics of Basic Entries and General & Factory Ledger are inter-related. It is assumed that you have learned how to pass Basic Entries. If you haven’t then Click Here and Learn them

Ok, after learning the basic Entries, you can easily do this topic. All you have to remember is that only 5 accounts are maintained in the Factory ledger and all other account are kept in General Ledger. (these 5 accounts are given in printable lecture below.)

Now if you are Passing an entry in Factory Ledger, just replace the all those accounts name with General Ledger Account, which are not maintained in the Factory Ledger.
Similarly, if you are preparing General Ledger, replace all those accounts with factory Ledger which are not maintained in General Ledger.
This concept has been clearly shown in the Printable tutorial below.

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General Ledger Factory Ledger Part 2

admin — Thu, 08 Oct 2009 09:10:53 +0000

This is part 2 of the topic “General and Factory Ledger”. To see part1 click here.

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Thanks

Basic Entries Part 2

admin — Thu, 08 Oct 2009 08:01:40 +0000

This is the Second part of the tutorial on Basie Entries . Click here to See the first part on the Basic Entries.

Basic Entries

admin — Thu, 08 Oct 2009 07:48:35 +0000

All most all of the entries follow the rules of Debit & Credit . For example the first entry is about the purchasing of material. When we would purchase a material, material will increase. As material is an asset, and increase in asset is Debit, So we will debit the material. At the same time Accounts payable or Creditors are increasing, so Accounts payable will be credited. Now the entry woul become:

Material
To Accounts Payable

The second entry is passed when we return the material, purchased earlier. Logically this entry would be the reverse of what we passed when purchasing the material. i.e.
Accounts Payable
To Material.

But if you don’t want to do this topic with the logic, there is another way:
As we know a producer applies material, labour and overhead to make work in Progress. Work in Progress is converted in to finished goods, and then these goods are sold.
This whole process is shown below.
Now the principal is that every element which is near the head is DEBITED, and every element which is near the Tail, is CREDITED.

For example
Finished Goods
To Work in Process
(Entry No 10 below)

Work In Process
To Material
(Entry NO 3 below)

Another thing which you should note that, Direct Material, Direct Labour is charged to WIP Account, whereas indirect material etc are charged to FOH control Account.

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