The Influence of the Accounting Method for Finished Products on Financial Accounting Assessment

DOI

10.2991/iscfec-18.2019.193How to use a DOI?

Keywords

Accounting for finished products; Accounting method; Distortion of accounting (financial) statements; Adjustment of financial results; Methodology for adjusting the indicators of financial accounting makes

Abstract

The report reveals the impact of alternative methods of accounting for finished goods on the valuation of current assets of the balance sheet and financial results reflected in the company's financial statements; explanations of possible legal distortions in the estimation of assets and profit indicators of the enterprise are given. Standard regulation of financial accounting in Russia provides for two options for accounting of finished products. The first option allows the use of only account 43 "Finished products" and the evaluation of finished products at actual cost. As a result, a true valuation of ac-counting indicators: finished goods in a warehouse, work in progress, cost, gross profit and sales profit. The second variant of accounting assumes the use, in addition to account 43, of an additional account 40 "Release of products, (works, services)" and the formation of the regulatory cost price. This variant of accounting is preferred, as a rule, by production enterprises of a serial and mass type. They choose a standard method of accounting of expenses and calculation of product cost. The report reveals how such a variant of accounting for finished products distorts the real value assessment of the above-mentioned indicators of financial reporting. The financial analysis made on its basis doesn't allow to estimate truthfully dynamics of the remains of finished goods in a warehouse and a condition of work in progress, profitability of the sold products and efficiency of sales. Such accounting statements do not allow you to judge the size and dynamics of production costs. To obtain reliable results of economic analysis and business valuation, the above-mentioned articles of the financial statements are subject to special adjustment. The report emphasizes the importance of preliminary acquaintance with the option of accounting for finished products for a proper understanding and "reading" of the articles of the financial statements.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

TY  - CONF
AU  - L.E. Tumali
AU  - A.V. Lapaeva
PY  - 2019/01
DA  - 2019/01
TI  - The Influence of the Accounting Method for Finished Products on Financial Accounting Assessment
BT  - Proceedings of the International Scientific Conference "Far East Con" (ISCFEC 2018)
PB  - Atlantis Press
SP  - 853
EP  - 855
SN  - 2352-5428
UR  - https://doi.org/10.2991/iscfec-18.2019.193
DO  - 10.2991/iscfec-18.2019.193
ID  - Tumali2019/01
ER  -