Midterm exam questions for Accounting (bia 84i) 25. Accounting for materials in basic production? Answer

Midterm exam questions for Accounting (BIA 84i)


25. Accounting for materials in basic production?
Answer: The main link in conducting accounting at the enterpriseis the accounting of materials. This is an integral part of the property of the enterprise, which is necessary for the successful existence and development of its activities.

Materials are involved in the production sphere and are its basis. They provide the process of output and participate in the formation of value.

Accounting for materials can affect the effectiveness ofthe activity of the enterprise as a whole, on its correct organization depends the definition of the need for production in various materials. Rational supply of them leads to a reduction in costs, increased financial results, coherence of all processes. Excess stocks of materials lead to freezing of monetary resources and inhibition of their turnover. The enterprise incurs losses due to additional funds necessary for storage and storage, the property tax is significantly increased. Failures in production can result in a shortage of necessary materials, which will affect the timing of the company's obligations to produce. Both cases have a negative impact on the financial result and lead to a decrease in profits.

Material accounting performs the following main tasks:

- control of the safety of resources;

- compliance of reserves with standards;

- control over the organization of supply of production of materials;

- Calculation of actual costs for the procurement of materials;

- distribution of the cost of materials for costing items.

Material resources participate in the productionprocess only once. Their cost is completely transferred to the created products. In this they differ from fixed assets. Accounting for materials allows the timely renewal of inventories.

In the production cost of production, material resources are significant. Qualitative accounting of materials and rational expenditure affect the increase in the financial performance of the enterprise.

50.The content of current assets Answer: Current assets represent all the assets of a company that are expected to be conveniently sold, consumed, used, or exhausted through standard business operations with one year. Current assets appear on a company's balance sheet, one of the required financial statements that must be completed each year. Current assets would include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets. Current assets may also be called current accounts. Current assets contrast with long-term assets, which represent the assets that cannot be feasibly turned into cash in the space of a year. They generally include land, facilities, equipment, copyrights, and other illiquid investments. Current assets are important to businesses because they can be used to fund day-to-day business operations and to pay for ongoing operating expenses. Since the term is reported as a dollar value of all the assets and resources that can be easily converted to cash in a short period, it also represents a company’s liquid assets. However, care should be taken to include only the qualifying assets that are capable of being liquidated at a fair price over the next one-year period. For instance, there is a strong likelihood that many commonly used fast-moving consumer goods (FMCG) goods produced by a company can be easily sold over the next year. Inventory is included in the current assets, but it may be difficult to sell land or heavy machinery, so these are excluded from the current assets. Depending on the nature of the business and the products it markets, current assets can range from barrels of crude oil, fabricated goods, works in progress inventory, raw materials, or foreign currency. Cash, cash equivalents, and liquid investments in marketable securities, such as interest-bearing short-term Treasury bills or bonds, are obvious inclusions in current assets. However, the following are also included in current assets: Accounts Receivable Accounts receivable—which is the money due to a company for goods or services delivered or used but not yet paid for by customers—are considered current assets as long as they can be expected to be paid within a year. If a business is making sales by offering longer terms of credit to its customers, a portion of its accounts receivables may not qualify for inclusion in current assets.