Accounting Posting with Standard Costing Method
Accounting Setups
Inventory Class
On the Item Card, if the Inventory Class is:
Finished Goods - Finished Goods inventory account defined on the Company Setup is used during posting.
Subassembly - Subassembly inventory account defined on the Company Setup is used during posting.
Raw Materials - Raw Materials inventory account defined on the Company Setup is used during posting.
Company Setup
The following GL Accounts are defined on the Company Setup:
Accounts Receivable
Accounts Payable
WIP
Inventory Adjustment
Capacity Expense
Indirect Capacity Expense
Material Variance
Capacity Variance
Purchase Variance
Account Posting Setups
The following GL Accounts are defined on Account Posting Setups. You can configure setups by Account Posting Group, Item Posting Group, or Item.
Sales/Sales Return
Cost of Goods Sold
Purchase/Purchase Return
Sales Discount
Item Journal Posting
Adjustment Journals
The Standard Cost is used as the default Unit Cost on the Item Journal Line. Users cannot overwrite the Unit Cost.
The Inventory and Inventory Adjustment accounts are used during posting.
Transfer Journals
No General Ledger Entries are created during posting.
Cycle Count Journals
The posting is the same as the Adjustment Journals.
Production Journal/Kitting
Production Journal can be used as Kitting Journal without a Work Order.
Debit | Credit |
|---|---|
Finished Good Inventory using Standard Cost amount Debit/Credit Material Variance for the Finished Goods | Raw Materials at the Standard Cost Capacity Expense for the Service items at the Standard Cost Indirect Capacity Expense is only enabled for Production Journals created from Work Order, not for kitting. |
During the daily Adjust Cost routine, if the component uses the Standard costing method, GoldFinch will not post additional variances for both the component and the output item as the Purchase Price Variance has already been posted on the Purchase Invoices.
If the component uses the FIFO costing method, GoldFinch will
Insert an adjustment Cost Entry for the components.
General Ledger Entries created:
Credit Raw Materials
Debit Material Variance
Update the Unit Cost on the Item Journal Line.
Nothing is done on the output item.
Warehouse Receipt Posting
The Expected Cost of the received inventory is recorded, but there are no General Ledger Entries created during posting.
The Expected Cost is based on the Standard Cost of the Item Card.
Purchase Invoice Posting
Debit | Credit |
|---|---|
For inventory items: Inventory account using the Standard Cost. Purchase Price Variance account: the difference between the Invoiced Cost and the Standard Cost is posted. For service items: WIP account for Service items that are Work Order related. Purchase account if they are not Work Order related. | Accounts Payable |
Purchase Credit Memo Posting
Debit | Credit |
|---|---|
Accounts Payable | Inventory account using Standard Cost. Purchase Price Variance account: the difference between the Credit Memo Cost and the Standard Cost is posted. |
Warehouse Shipment Posting
The Expected Cost of the shipped inventory is recorded, but there are no General Ledger Entries created during posting.
Sales Invoice Posting
Debit | Credit |
|---|---|
Accounts Receivable COGS account for inventory items using the Standard Cost For Service Items, there is no General Ledger Entry created for the cost of the item during posting. | Sales Sales Tax Payable Inventory account for inventory items using the Standard Cost |
Sales Credit Memo Posting
Debit | Credit |
|---|---|
Sales Sales Tax Payable Inventory account for inventory items using the Standard Cost. For Service Items, there is no General Ledger Entry created for the cost of the item during posting. | Accounts Receivable COGS account for inventory items using the Standard Cost |
Work Order Posting
Production Journal Posting
Output Item
The Expected Cost of the finished inventory is recorded but there are no General Ledger Entries created during posting.
Expected Cost is based on Standard Cost * Output Qty.
Components
Debit | Credit |
|---|---|
WIP | Raw Material Inventory Account using the Standard Cost. |
Direct Work Center Service
Debit | Credit |
|---|---|
WIP | Capacity Expense Account using the Standard Cost (This is set up on Company Setup, and it should be a contra Payroll GL Account, or Labor Recovery GL Account.) |
Indirect Work Center Service
Debit | Credit |
|---|---|
WIP | Indirect Capacity Expense Account |
Finish Work Order/Adjust Cost Routine is Run
Debit | Credit |
|---|---|
Finished Good Inventory using Standard Cost amount Debit or Credit to the Material Variance and Capacity Variance accounts | WIP Debit or Credit to the Material Variance and Labor Variance accounts |
Additional Routines
To learn more about how to update Standard Costs for the parent items (even with FIFO costing method) for reporting purposes, read Process Standard Cost Worksheet.