Page 83 - Microsoft Word - 00 ACCA F2 Prelims.docx

Accounting for materials

The material inventory account

Materials cost account

$ $

Opening balance (1) Issues to production (4)

Purchases (2) Returns to suppliers (5)

Returns to stores (3) Production overheads (6)

Statement of profit or loss (7)

Closing balance (8)

1 The opening balance of materials at the beginning of a period

2 Dr Materials, Cr Payables or Bank

3 Dr Materials, Cr Production or WIP

4 Direct materials used in production Dr Production, or WIP Cr Materials

5 Dr Payables or Bank, Cr Materials

6 Indirect materials are treated as overheads. Dr Overheads, Cr Materials

7 Material write-offs Dr statement of profit or loss, Cr Materials

8 The closing balance of material inventory, it will become the opening balance at
the beginning of the next period

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