Bookkeeping Cost Accounting

Author : William Kent
Publisher : Forgotten Books
ISBN 13 : 9781330020876
Total Pages : 277 pages
Book Rating : 4.0/5 (28 download)

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Download or read book Bookkeeping and Cost Accounting for Factories written by William Kent and published by Forgotten Books. This book was released on 2015-06-02 with total page 277 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from Bookkeeping and Cost Accounting for Factories The author of this treatise was a bookkeeper and cost accountant for some years before he became ail engineer, and many times during his career as an engineer and as manager of works he had occasion to install systems of bookkeeping and cost accounting and to audit books. In this way, and by reading much of the extensive literature on accounting, he has kept in touch for over forty years with the development of accounting practice. More than twenty years ago he was urged by the president of one of the largest manufacturing corporations in New England to write a book on factory cost accounting, but he was then too busy with other matters and the suggested book had to be postponed to the indefinite future. Some three years ago the suggestion was repeated at a conference of several professional accountants, who agreed that the literature on cost accounting was in a most chaotic shape and was altogether unsatisfactory. The author then began a serious re-study of the subject, by reading many of the most recent books, both English and American (there has been a large crop of them in the last ten years), re-reading the articles on accounting that had appeared in Engineering Magazine and in the Transactions of the American Society of Mechanical Engineers during the last twenty-five years, and by visiting many factories and conferring with t heir managers and cost accountants. The result of the study was to confirm the statement that the word "chaos" properly describes the bulk of the literature, and the cost accounting methods in most factories. There are many good books 011 bookkeeping and ordinary accounting, and some useful books on certain parts of the general subject of cost accounting, but there seems to be a lack of books covering a wide field and representing the host modern practice. The principal faults of the existing books may be listed as follows: 1. Ovcr-conscrvatism. Adherence to old-fashioned theories and fallacies. 2. Over-development of red tape, leading to unnecessary clerical work. 3. Too much variety and novelty of method. 4. Vagueness and lack of detail in descriptive text. 5. Incompleteness. Partial treatment of complex subjects. Accounting practice in factories, and that of professional accountants who are introducing their "systems" into factories, varies all the way from excellent to very }K>or. Some accountants arc in advance of the books both in theory and in practice. Others have not yet come abreast of the modern ideas of accounting. A few of the fallacies that are rapidly being discarded are: that interest on investment forms no part of factory cost; that business and selling expense arc part of cost; and that a profit cannot arise until a thing is sold. Wrong methods of distributing burden are most common. The ratio of nonproductive to productive lalior is by many still considered to be an index of the efficiency of the manager. "Tying the costs to the general books" is erroneously supposed to prove the accuracy of the cost accounts. Inventories are priced and profits and losses are computed on the basis that the goods in the warehouse and stores arc worth just what it cost to produce them, possibly many months earlier, although market values may have advanced or declined in the meantime. Inventories are inflated by charging to the cost of finished product the cost of keeping part of the factor}' idle. The time has arrived when there is a need for a systematic treatise on cost accounting which will start the student at the beginning with the elementary principles of double entry bookkeeping and lead him through factory accounting to cost accounting, giving him not only the fundamental theory in accordance with the views of the ablest modern accountants, but also warning him against the time-worn fallacies of the older school. Such a trealise the author has un...