The uninterrupted process of manufacturing products is not feasible without the availability of a sufficient number of refineries. These are integral elements of production that serve as objects of labor. Each cycle they are completely consumed, transferring all their value to the finished product. Inventories are considered one of the main components of current assets. And not in vain: without their participation, production of products will be impossible.
Inventory Accounting: Organization Principles
The accounting procedure of the MPZ is established by PBU 5/01. In accordance with this provision, the following funds are recognized as inventories:
- materials, raw materials and other assets that are fully consumed in the manufacture of products or in the performance of work (provision of services);
- intended for further sale (goods, finished products);
- assets necessary for the management needs of the enterprise.
It is worth noting that the category of reserves in the Russian practice of accounting does not include work in progress, as well as real estate intended for resale. IFRS 2, on the contrary, classifies these types of assets as IPZ. According to international standards, inventories also include funds that are used in the manufacturing process of products (rendering services or performing work) for more than a year or one standard operating cycle.
PBU recognizes in the MPZ only those assets that participate in the production process once, as well as goods and finished products stored for sale (resale).
The concept of inventories and their gradation
Inventories - assets (objects of labor) used in the production process once. Their value is completely transferred to finished products, that is, they are one of the main elements of cost. The MPZ also includes goods and products in stock intended for further sale.
The stocks of an enterprise are classified according to their purpose and properties (technical characteristics). Depending on the functions performed, they distinguish:
- basic;
- auxiliary.
In the group of auxiliary production stocks, containers and packaging materials, spare parts, fuel and MBP are separately allocated. This is due to the features of their use. Fuel is divided into economic (for heating), engine (fuel) and technological. Container materials are used for transportation, storage and packaging of finished products and other stocks.
The composition of the main and auxiliary MPZ
Main inventories are the main components of manufactured products. These are component parts, basic materials and raw materials in their composition, purchased semi-finished products. In this case, raw materials are agricultural products and mining, and materials - processing. Semi-finished products, before participating in the production of products, went through certain processing stages, but the products have not yet become.
Auxiliary reserves are those items of labor that are used to maintain the main property (lubricant) or housekeeping facilities (cleaning the premises). This also includes MPZ, which impart certain qualities or properties to the basic materials (paint and varnish coatings).
Organization’s inventories include a separate group “Low-value and wearing items” (IBE).Assets are considered to be of low value, the value of which is less than that established for fixed assets, regardless of the period of their use. Wearables include property whose service life is less than a year.
Types of MPZ, their gradation on technical grounds
Inventories are classified in groups depending on their purpose and role in the manufacturing process. The following types are distinguished:
- raw materials;
- semi-finished products purchased;
- spare parts;
- fuel;
- household supplies and equipment;
- container materials and containers;
- building materials;
- overalls and specials equipment;
- auxiliary materials;
- others.
Within each category, stocks are divided into smaller groups depending on their belonging to a particular variety, type, size, and other characteristics. This is the gradation in technical characteristics, which then becomes the basis for creating lists of inventories. They are necessary for the systematization of stocks used in the production and organization of analytical accounting.
MPZ nomenclature and accounting unit
Each type of material is assigned a stock code (number) according to the numbering system installed at the enterprise. By combining stocks in groups according to their functions, location and other characteristics, an nomenclature is formed containing data on each material. The accounting price of the MPZ type may also be reflected here, then such a list is called a nomenclature-price tag.
The established stock code is subsequently indicated each time the materials are used. Arrivals, retirements, transfer to a warehouse or vacation in production are accompanied by entries in the records not only the name of the plant, but also their numbers. This avoids errors in accounting and warehouse accounting.
For the unit in the accounting of the MPZ take a group of homogeneous stocks, a batch, an item number, etc. Each organization independently sets this indicator. It should be borne in mind that it should provide control over the availability and movement of materials, as well as contribute to the formation of reliable and complete information about them. The inventory is kept in quantitative (material) and monetary meters.
Balance sheet
MPZ enter the company for various reasons. For example, under a supply (purchase and sale) agreement, when making a contribution to the capital or receiving it free of charge, as well as during the own production of materials or in connection with the disposal of fixed assets (other property). Working inventories in the balance sheet reflect the actual cost of their acquisition. An exception may be only those materials that:
- have lost their value in a year;
- morally outdated;
- lost (partially) their properties.
They are reflected at the price of a possible sale. The difference between the selling and initial cost is attributed to the financial result.
A different pricing procedure has been established for those inventories that come from a contribution to capital or gratuitous receipt. In the case of a contribution by the founder, the cost of materials is determined using a monetary value. And when received free of charge, the balance sheet reflects the value of the market value of the exact (or similar) materials on the posting date. In the event of an exchange of initial cost, the amount at which the inventories were listed in the balance of the enterprise making the transaction is considered.
Components of the actual cost of inventories
PBU 5/01 indicates that inventory should be taken for accounting at their actual cost. The position also regulates the components of this value. This includes the amounts associated with the acquisition of a refinery:
- spent on paying bills to the supplier according to the supply contract;
- customs duties and other fees;
- non-refundable taxes;
- paid for consulting and information services;
- delivery and procurement costs (including insurance);
- expenses for packing, sorting, part-time and other actions aimed at bringing the refinery to a usable condition;
- remuneration to intermediaries involved in the transaction;
- other costs directly related to the purchase of materials.
The actual cost does not include the amount of general expenses.
Calculating the value is usually not difficult. But this only becomes possible at the end of the month, when the accounting department receives numerical data on all the components of the cost of inventories (invoices, payment documents, etc.). At the same time, materials move daily, their vacation cannot be stopped - all production will “stand up”, and the enterprise will suffer heavy losses. At the same time, the movement of assets should be recorded in a timely manner, which necessitates the introduction of special methods for calculating actual prices or establishing planned costs.
Methods for assessing MPZ when they are written off
When materials are released at actual prices for production or retired for other reasons, the assessment is carried out using:
- indicator of average cost - the total cost of materials is divided by the amount used for those stocks whose price is difficult to calculate separately;
- the value of the cost of each unit is relevant for accounting for expensive materials (for example, jewelry);
- FIFO method - the first leaving party is written off at the cost of the first incoming party;
- LIFO method - the first batch is released at the prices of the last arrival.
An entity applies one of the possible methods for each group or type of inventories recommended by the accounting policy and job description of an accountant. In the preparation of financial statements, inventory balances are reflected in accordance with the established accounting method.
If the company uses planned prices, then at the end of each month there is a need to calculate the deviations of the actual cost from the set. The value is determined for each group of materials. After finding it, it is possible to calculate the actual cost of inventories used in production. To do this, the accounting value is adjusted by the amount of deviation.
Stock accounting
The following accounts are used to account for inventories: 10, 15, 16, 43. All of them are active in structure: they reflect income on debit and expenses on credit. Inventory accounting mainly occurs on the synthetic account “Materials”. On his subaccounts, analytical records are kept, according to the established nomenclature and storage locations. Reflect materials here at both established and actual prices.
Analytical accounting of inventories can be organized in two ways: working capital and balance. In the first case, assets are recorded in documents both in value and in quantitative terms. The second method, however, involves the use of only a sum estimate.
Postings on the movement of the MPZ
The performance of business operations entails a change in the data on the amount of funds and liabilities of the enterprise, so each movement should be recorded in the accounting data. For the timely reflection of information, postings are made. When registering the receipt, the MPZ accounting accounts will be debited in correspondence with the accounts:
- 60 (76) upon purchase;
- 75 - in case of receipt from the founders;
- 86 - with targeted financing;
- 98 - upon receipt of the grant;
- 20, 29 - if stocks are made independently.
VAT on purchased materials is allocated to score 19.
Upon disposal, the amounts are written off by posting Dt 20, 23, 29 Kt 10. The implementation of the refinery to third parties is accounted for by Dt 91.2 Kt 10, 43. The VAT on the sold assets is recorded as: Dt 91.2 Kt 68.
Inventory analysis
The value of MPZ in the process of manufacturing products cannot be overestimated.By planning the right amount of resources needed for production, you can achieve maximum efficiency of the enterprise. Thanks to the analysis of the MPZ, it is possible to determine the reserves for reducing the cost of production, which leads to an increase in profit and an increase in the benefits of the organization. For these purposes, consider indicators such as:
- average values of stock balances and the dynamics of changes in their value;
- turnover and the duration of one turnover of the MPZ by elements and in general;
- the most significant stock positions for production.
Effective planning of expenses for the acquisition of these assets and their management significantly accelerate the turnover of capital, increasing its profitability. The right approach can reduce the cost of storing materials, leading the company to greater income.
Without materials and stocks, no production or agricultural organization can operate. It is important to consider everything: the number of items purchased, rational use, timely accounting of operations and a thorough analysis of the results.
