Manufacturing costs are those which relate to the manufacture of a product and consist of three basic manufacturing cost components which are materials, labor, and expenses.
As the number of bookkeeping transactions increases an accounting ledger needs to be split into various subsidiary ledgers. Self balancing ledger accounting is a method of entering two sided transactions in each ledger using adjustment accounts in order that a trial balance can be extracted from each of the subsidiary ledgers.
The sales volume variance has two components, the sales mix variance and the sales quantity variance. The sales mix variance shows the effect of the difference between the actual and budgeted sales mix. The sales quantity variance shows the effect of the difference between the actual volume sold at the budgeted mix and the budgeted volume.
The net income from the profit and loss account is transferred to the partnership appropriation account in order that it can be adjusted for partner salaries, commissions, and interest. Any residual net income after adjustment is distributed to the partners.
The manufacturing account is a general ledger account used by a manufacturer to accumulate production costs such as direct materials, direct labor and manufacturing overheads. The account is used to calculate the manufacturing cost of goods completed during an accounting period.
The trading and profit and loss accounts are temporary accounts in the general ledger. The trading account shows the gross profit and is particularly useful for a trading business which buys and sells finished products as it allows the gross profit and gross profit percentage to be calculated.
The sales return day book is used to record goods returned by customers. The sales return book is not part of the double entry posting and is simply a chronological list of credit notes issued to customers and used to post the accounts receivable and general ledgers.
When a partner retires the existing partnership is dissolved. To calculate the amount due to the retiring partner net assets are adjusted to fair value. Depending on the method of partnership accounting used bonus or goodwill journal entries may be necessary if the amount paid to the retiring partner differs from their adjusted net asset value.