Introduction
The following work presents the analytical system or also called detailed, as we already know over time, man has been looking for new ways to facilitate some activities in our life, such is the case of this system where an analysis is shown that will consist of in identifying and separating the elements of the sale and purchase classification, as well as knowing how it is formed and also making use of the movements of the accounts through the theoretical and the practical.
This research is presented explicitly along with the help of some examples to clarify the topic to be discussed below.
Summary
The analytical or detailed system is based on the use of a special account for the classification of sale, this is in order to overcome the inconveniences within the global system or general merchandise. This analysis consists of the identification and separation of the elements that make up a whole. It is necessary to make use of the beginning and ending inventory to determine the cost of the merchandise sold.
Abstract
The analytical system or detailed system, is based on the use of a special account for the classification of sale, this is in order to overcome the inconvenience within the global system or general goods. This is analysis consists of the identification and separation of the elements that make up a whole. There is a need to make use of the initial inventory and to determine the final cost of goods sold.
Methodological aspects
During the following paragraphs, a documentary investigation was applied, since at the beginning of said investigation, as its name indicates, it is carried out relying on documentary sources, that is, on documents such as those obtained through bibliographic sources, hemerographic, and other documents that are in archives such as official letters, circulars, files, etc. "Based on the research, bibliographic sources were consulted in accounting texts such as" MA Octavio Rolando Lara Martínez.
The generic method was also used since it looks for the genesis of the events, that is, the antecedents. This method announces in its own title, what is its purpose: to find the initial cause, the generating event.
Information Techniques Applied
Some of the techniques applied in the investigation are the following:
- Internet Document review Collection and analysis of information.
Internet
In the present investigation, use was made of the benefits that technology provides us today, such is the case of the internet, using it as a means to obtain more information more quickly.
Document review
The documentary review was an important point to structure the conceptual theoretical framework from the consultation of some books, articles, newspapers, magazines, or some other tool where information on the subject could be found.
Information collection and analysis
This technique is important since it is used to study merchandise registration systems.
Theoretical framework
Definition of Inventory.
"It is that documentary record of goods and other objects belonging to a natural person, a community and that is made from great precision and neatness in the capture of the data."
Definition of merchandise.
“From the Italian mercanzia, a merchandise is a movable thing that is constituted as an object of treatment or sale. The concept is usually applied to economic goods that are susceptible to purchase or sale. "
Development of the topic
"The analytical or detailed method provides better information later, as its name implies, the analysis or detail is based on the use of a special account for each classification of the sale."
“In order to overcome the inconveniences observed in the global or general merchandise system, the analytical or detailed system was designed, which as its name implies, is based on the analysis of the operations carried out with merchandise.
- The Analysis consists, in general, in the identification and separation of the elements that make up a whole, thus. The Analytical or Detailed system consists of the identification and separation of the concepts affected by the operations carried out with merchandise. " “In general, in the management of the merchandise sale and purchase operation, the following intervene:
Inventories purchases sales
Inventories refer to the beginning and ending inventory required to determine the cost of the merchandise sold, as discussed later. The purchasing operation includes the purchases themselves, the freights and the charges on purchases, the returns made to suppliers and the discounts on purchases that have been obtained, which represents the net purchases. The sales operation includes sales made, returns received from customers and discounts on sales they have granted, which represents net sales.
As explained, the above classification is based on a detailed method in which a separate account is allocated for each operation, as represented below:
| Inventories | Net purchases | Net sales |
| a) Initial b) Final | a) Gross purchases b) Returns on purchases c) Discounts on purchases d) Freight and import duties, customs expenses, agent commissions, transportation, etc. | a) Gross sales b) Returns on sales c) Discounts on sales |
As can be seen, the basic accounts essential for the operation of the procedure are: inventories, net purchases and net sales. The procedure could work with only these 3 accounts but it will reduce the information and the idea of detailed or analytical, whose essence is to provide detailed information on the result of the operations carried out.
The movement of the accounts are the following:
| 0121 Inventory of merchandise | |
| Charges 1. Inventory of merchandise at cost prices at the beginning of the year. | Fertilizers |
The balance of this account must be debtor and has no other movement during the year; represents the total investment in merchandise inventory at the beginning of the year.
The following accounts are used to record the cost of net purchases:
| 5060 Gross purchases | |
| Charges 1. Amount of supplier invoices for merchandise purchases at cost price. | Fertilizers |
The balance of these accounts must be debit and represents the gross purchases that have been made. It does not represent net purchases because it is necessary to reduce returns on purchases and discounts that decrease the amount; they must be recorded separately in this method, which is analytical and requires detailed information.
| 5061 Returns on purchases | |
| Charges | Fertilizers 1. Costs of returned merchandise at the supplier's invoice price. |
| 5062 Purchase discounts | |
| Charges | Fertilizers 1. or discounts obtained on purchases that reduce the value of the supplier's invoices. They are generally obtained by volume of purchases or by some special concession. |
The previous accounts are of a creditor nature, that is, they must have a credit balance and reduce the amount of account 5060, gross purchases. The sum of the accounts 5060, gross purchases, 5061, returns on purchases and 5062, discounts on purchases, represents the net purchases at supplier prices before the expenses inherent to the purchase, such as freight and duty, customs expenses, etc.
| 5063 Expenses on purchases | |
| Charges 1. Amount of freight and import duties, customs expenses, agent commissions, transportation, etc., that originate the purchased merchandise. | Fertilizers |
The balance of this account is of a debit nature and represents the expenses on the purchases that have been made from the moment the supplier ships until the merchandise is received at the entity's warehouses.
To the net purchases at the supplier's price (accounts 5060, 5061, 5062) the amount of this account is added, which constitutes part of the cost of the goods purchased.
Therefore, the cost of the goods purchased is integrated as follows:
| 5060 Gross purchases Less: 5061 Returns on purchases 5062 Discounts on purchases Net purchases at supplier price
Plus: 5063 Expenses on purchases Cost of net purchases |
$ xxxx xxxx | $ xxxx xxxx xxxx
xxxx $ xxxx |
The following accounts are used to record net sales:
| 4060 Gross Sales | |
| Charges | Fertilizers 1. Total amount of the invoices that cover the goods sold. |
The balance of this account is creditor in nature and represents the total gross sale that has been made. It does not represent the net sale because it needs to decrease merchandise returns and sales discounts, which decrease the amount of this account; they must be registered separately in this method, as noted above.
| 4061 Returns on sales | |
| Charges 1. Value of merchandise returned by customers at the sale price indicated in the invoices. | Fertilizers |
| 4062 Sales discounts | |
| Charges 1. on sales made to customers. They are generally awarded for sales volume or some special or strategic concession. | Fertilizers |
The two previous accounts are debtor in nature, that is, they must have a debit balance and decrease the amount of account 4060, gross sales. The sum of accounts 4060, gross sales, 4061, returns on sales, and 4062, discounts on sales, represent net sales.
Therefore, the integrated net sales as follows:
| 4060 Net Sales Less: 4061 Returns on sales 4062 Discounts on sales Net sales | $ xxxx xxxx | $ xxxx xxxx $ xxxx |
In this method, each account has homogeneous operations and, therefore, there is clean (not mixed) information that allows the reader to form a well-founded judgment.
The ending inventory has not been considered in any of the accounts discussed above. At the end of the fiscal year or period in which the cost of what is sold is to be determined, it will be necessary to carry out a physical inventory to be valued at the purchase price (cost), in order to determine its amount.
With the ending inventory you have all the elements to determine the cost of sales, applying the following reasoning:
Net purchases are added to the initial inventory and the final inventory is subtracted from this sum, obtaining the cost of what is sold as a difference.
To illustrate the above, below is how to determine the cost of sales under this method:
| Sales cost | ||
| Starting inventory counts 0121 Plus: Net purchases: 5060 gross purchases Less:
5061 Returns on purchases 5062: Purchase discounts Less: Final inventory Sales cost |
$ xxxx
(xxxx) (xxxx) |
$ xxxx
xxxx xxxx $ xxxx |
To determine the cost of sales for accounting purposes, account 5065 is required, cost of sales (from the detailed analytical method), which will have the following movements:
| 5065 Cost of sales | |
| Charges 1. Transfer of the amount of the initial inventory account 0121.2. Transfer of the amount of gross purchases account 5060.3. Transfer of the amount of expenses on purchases account 5063 | Fertilizers 1. Transfer of the amount of refunds on purchases account 50612. Transfer of the amount of discounts on purchases account 5062.3. Amount of the final merchandise inventory, which must be charged to account 0121, merchandise inventory. |
The account balance represents the cost of goods sold determined under this method.
Accountingly, the following are recorded: the initial inventory, entry number 1 of the charges, the integrated net purchases number 2 of the charges, 1 and 2 of the credits, and the final inventory of the number 3 entry of the credits. "
Advantages of the analytical system.
The main advantages of the analytical or detailed procedure are the following:
- At any time, it is possible to know the amount of the initial inventory, sales, purchases, purchase expenses, returns and on purchases and on sales, because for each of these concepts a special account. The formation of the Profit and Loss statement is facilitated, because the amount of each of the concepts with which it is formed is known separately. Greater clarity in the registration of merchandise operations.
Disadvantages of the analytical system.
The main disadvantages of the analytical procedure are the following:
- It is not possible to know, at any given moment, the amount of the final merchandise inventory, since there is no account that controls the stocks. It is not possible to discover if there have been losses, theft or errors in the handling of the merchandise, since It is not possible to determine exactly the amount of merchandise that should be there, because there is no account that controls the stocks To know the amount of the ending inventory, it is necessary to do a physical count of the stocks, a task that sometimes requires to close the business, to be able to carry it out, mainly when a wide variety of items have to be measured, weighed or counted.You cannot quickly know the cost of what is sold or the gross profit or loss, until the amount of the final inventory.
Due to the above disadvantages, this procedure is only used in businesses with low economic capacity.
Adjustments to determine gross profit or loss. When the analytical or detailed procedure is carried out, in order to know the gross profit or loss, each of the results of the first part of the Profit and Loss statement must be obtained, through charges and credits, in this way:
- To obtain net sales, the amount of returns and over sales must be subtracted from the Sales account, by means of a charge, to obtain total purchases, it must be added to the Purchasing account, through a charge, the amount of the purchase expenses.To obtain the net purchases, you must subtract from the Purchase account, by means of a credit, the amount of the returns and on purchases.To obtain the sum or total of merchandise, you must Add to the Purchasing account, by means of a charge, the amount of the initial inventory. To obtain the cost of what is sold, the amount of the final inventory must be subtracted from the Purchasing account, through a credit. the gross profit or loss, must be subtracted from the Sales account, by means of a charge, the amount of the cost of the sold,that appears as a balance in the Purchasing account. "
conclusion
This merchandise registration system is quite tedious, from what we have already seen, an account is opened by concept, which makes it very complex in addition to being tedious, however it is possible to verify the merchandise that is in the warehouse and know with accuracy of losses and profits.
We suggest you watch the following video on inventory management basics to learn more about the subject:
Bibliographic references
- Basic accounting. Joaquín Moreno Fernández. Continental publishing company. First edition. Mexico 2002, page 135, MA Octavio Rolando Lara Martínez. Apuntes.http: //www.definicionabc.com/economia/inventario.php Retrieved on May 8, 2015.Definition of merchandise - What it is, Meaning and Concept http://definicion.de/mercancia/#ixzz3ZZiFRnr4 Retrieved on May 8, 2015.
MA Octavio Rolando Lara Martínez. Notes.
www.definicionabc.com/economia/inventario.php Retrieved on May 8, 2015.
Definition of merchandise - What it is, Meaning and Concept http://definicion.de/mercancia/#ixzz3ZZiFRnr4 Retrieved on May 8, 2015.
Basic accounting. Joaquín Moreno Fernández. Continental publishing company. First edition. Mexico 2002, page 135
MA Octavio Rolando Lara Martinez. Notes
Basic accounting. Joaquín Moreno Fernández. Continental publishing company. First edition. Mexico 2002, page 135
MA Octavio Rolando Lara Martínez. Notes.
From the Authors
Xochiehecatl Chávez Ordoño.
Guadalupe Zárate Guirao.
Jhovana Amaranta Gómez Camacho.
Jesica Margarita Viza Hernández.
Students of 2nd semester of Engineering in business management.
Technological Institute of Tuxtla Gutiérrez, Chiapas, Mexico.
