Question

Describe the additional accounts and procedures used in manufacturing companies

Answer 1

1)The three types of accounts that are used specifically in manufacturing companies are as follows:

• Direct material inventory. The direct material (also known as raw materials) inventory shows all the materials the company uses to make a product
• Work-in-process inventory
• Finished goods inventory.

2)In addition, a manufacturing business must use either follow a perpetual inventory or periodic inventory system to identify and track the quantity of units of inventory that they have on hand as this information is important for determining the valuation of inventory

3)The accounting for manufacturing businesses is much more detailed than the accounting that is required for a business that maintains no inventory.

4) To account for all expenses that a manufacturing company has  incurred during the course of making products for resale, a manufacturing company has a cost of goods manufactured account.