Introduction
Many accountants prepare the "Cost Statement of the Production Sold", without being aware of the importance of its correct completion to carry out an adequate analysis and interpretation of it, sometimes even forcing its balance, thus distorting the interpretation that he is realized. According to the quality of the information issued, this will be the degree of objectivity of the analyzes and interpretation that are made of it; if the information is wrong, this will be the case to a great extent with the analyzes carried out as well as the decisions made by the managers in question.
objective
The objective of this work is to show how to verify the authenticity of the "Production Cost Status", as well as the importance of decision-making by the organization's managers.
Development
Cost Status of Production Sold
This Financial Statement allows, among other things, to verify the correctness of the balance of the Cost of Sale account as well as its correct analysis and interpretation, to a large extent the certainty of many decisions to be made. Starting from the total Expenses by Items presented by the organization at the end of the period analyzed, taking into account the various expense accounts that are analyzed by items of expense; The preparation of this Financial Statement is carried out considering the aforementioned balances, as well as the variations of the Production in Process and Finished Production accounts, so it is also possible to verify these last two accounts, the causes of certain adjustments or destinations of products in process or finished.
The resulting amount must coincide with the balance of the accounts 810 to 818 "Cost of Sale", which appears in the Balance of Balance Checks, for which reason the accountants sometimes achieve their balance by force, by including the existing difference in the rows “(+) Increase (-) Decrease in Production in Process Accounts (Except for Stored Products Intended for Input or Self-consumption), for Items Other than Cost Charges and Production Credits” and “(+) Increase (-) Decrease in Inventory Accounts Corresponding to Finished Productions, for Items Other than Production Charges and Delivery Credits ”, in other cases said difference is included in the row corresponding to“ Total Item Expenses ”.
For a better understanding about the accounting operations that do not provoke in the Production in Process account, variation for a concept other than "Cost Charge and Production Credits", as well as in the Finished Production account to "Production Charges and Credits for Deliveries ”, the following diagram is shown:
Any accounting operation carried out debiting the Production in Process account with credit to the one indicated under the heading "Miscellaneous" is charged to the Incorporated Costs of the Production in Process account, and must be analyzed in the corresponding expense element, therefore any Credit made to the Production in Process account whose counterpart is a group account entitled "Various", must therefore have been charged prior to the Production in Process account.
Any accounting transaction carried out between the Production in Process, Finished Production and Cost of Sale accounts does not produce a variation for “Different Concept”, but if it is carried out between one of them with any other, such as when a surplus of products in process or finished products, the “Surplus in Research” account would intervene, therefore constituting a variation for a concept other than “cost charges” in the Production in Process account or in the case of Finished Production at “production charge "
Likewise, there may be accounting operations carried out with the aim of showing fictitious profits, by improperly crediting the “Cost of Sale” account and debiting any other Balance Sheet Verification account with difficult verification of the accounting balance, such as “State Investment”.
In the cases mentioned above, the amount shown in the Cost Statement of the Production Sold does not coincide with the balance shown in the Cost of Sale account, which is due to the operation carried out between it and the State Investment account, due to this in On many occasions, this difference is unduly reflected as variations for different concepts, both in the row corresponding to Production in Process, as in the Finished Production, or in the row corresponding to Total Expenses by Elements, with the aim of achieving the block of This model is for this reason that when examining the State of Cost, it must be investigated that the amounts reported as "Variations for Different Concepts" respond, and therefore must verify the correctness of them, since they may correspond to multiple causes,from the simple ignorance on the part of the personnel that prepares said Financial Statement and consigns the mentioned amount to force the balance, to those cases in which it is intended to mask incorrect accounting operations that prevent the correct balance of the model.
Yes, when reviewing the Cost Status of the Production Sold, there is a difference with respect to the balance shown in the Cost of Sale account, this means that all the accounting operations that affect the Production in Process, Finished Production accounts were not considered in its preparation. o Cost of Sale, and as a consequence must assess the magnitude of the difference in question as well as its incidence, taking into account whether the amount determined is higher or lower than the account balance since:
• If the determined figure is higher:
- There may be accounting operations credited to the accounts, Production in Process, Finished Production or Cost of Sale, not considered in said state and that at the moment to analyze said state are unknown.
• If the determined figure is lower:
- There may be accounting operations debited to the Production in Process, Finished Production or Cost of Sales accounts, not considered in said statement and that at the moment analyzing said statement are unknown.
Review Row No. 5.0 "(+) Increase (-) Decrease in Production in Process Accounts (Except for Stored Products Intended for Input or Self-consumption), for Concepts Other than Cost Charges and Production Credits".
Request details of the operations that cover the amounts shown in this row, and must verify the veracity of them, for which the following should be taken into account:
• Leftover Inventory: Its amount is added. Verify if it is covered by its corresponding file, which must be accounted for in account 555 to 564 "Surplus Assets under Investigation" or 930 to 939 "Income per Surplus Assets".
• Missing Inventory: Its amount is subtracted. Verify that it is covered by its corresponding file, which must be recorded in the accounts in accounts 332 to 333 "Missing assets under investigation" or 850 to 854 "Expenses for missing assets".
• Fixed Assets: Its amount is subtracted. Its correct accounting must be verified, for which account 240 to 254 “Tangible Fixed Assets” must have been affected.
• Supplies and Tools: Their amount is subtracted. Verify its accounting, for which account 183 to 210 "Tools and Tools" must have been affected.
• Materials, Attachments, etc., Intended for Input: Their amount is subtracted. Check their accounting in the accounts; 265 to 279 "Material Investments", 280 to 289 "Equipment to Install and Materials for the Investment Process" or corresponding expense accounts.
• Accounting Adjustments: Check their veracity.
Row No. 11
Review Row No. 8.0 “(+) Increase (-) Decrease in Inventory Accounts Corresponding to Finished Productions, for Concepts Other than Production Charges and Delivery Credits”.
Request details of the operations that cover the amounts shown in this row, and must verify their veracity, for which the following must be taken into account:
• Leftover Inventory: Its amount is added. Verify if it is covered by its corresponding file, which must be accounted for in account 555 to 564 "Surplus Assets under Investigation" or 930 to 939 "Income per Surplus Assets".
• Missing Inventory: Its amount is subtracted. Verify that it is covered by its corresponding file, which must be recorded in the accounts in accounts 332 to 333 "Missing assets under investigation" or 850 to 854 "Expenses for missing assets".
• Fixed Assets: Its amount is subtracted. Its correct accounting must be verified, for which account 240 to 254 “Tangible Fixed Assets” must have been affected.
• Supplies and Tools: Their amount is subtracted. Verify its accounting, for which account 183 to 210 "Tools and Tools" must have been affected.
• Materials, Attachments, etc., Intended for Input: Their amount is subtracted. Check their accounting in the accounts; 265 to 279 "Material Investments", 280 to 289 "Equipment to Install and Materials for the Investment Process" or corresponding expense accounts.
• Accounting Adjustments: They are made for duly justified causes due to rectification of errors made.
Row No. 12
Review Row No. 9.0 "Cost of Production Sold".
Verify that the determined amount coincides with the balance of accounts 810 to 818 "Cost of Sale", which appears in the Balance of trial balances.
Conclusions
The adequate analysis and interpretation of the production cost status allows managers to make an appropriate decision regarding possible deviations of material resources for purposes not previously approved or causes that must be duly investigated to outline future policies aimed at eradicating them.
Bibliography
1. CENTRAL PLANNING BOARD-STATE FINANCE COMMITTEE-STATE PRICE COMMITTEE-STATE STATISTICS COMMITTEE-JOINT RESOLUTION of February 18, 1989. "General Guidelines for the Planning and Determination of Production Cost.
2. José Antonio Domínguez Machuca (other authors) "Operations Management-Strategic aspects in Production and Services"
3. José M Bucelas, D. A López. "Productive Processes II Complete 2004"
4. Lucy Torres Cabrera, Ana Julia Urquiaga Rodríguez. "Theoretical Foundations on Production Management".
5. SIME Accounting Manual
6. Resolution 297/2003 Ministry of Finance and Prices.
7. Violena Hernández, Yoselín Castillo, Gema de la Incera. "Electronic Book of Business Administration. CETDIR ”2003.
