ACCOUNTING FOR STOCK AND WORK-IN-PROGRESS IN MANUFACTURING FIRMS. A CASE STUDY OF EMENITE LIMITED ENUGU,. A RESEARCH PROJECT MATERIAL ON ACCOUNTING
This study is designed to portray the theory and practice in respect of the accounting for stock and work-in-progress is in manufacturing firms. It is helped that the knowledge presented by this study will tremendously be useful to manufacturing firms in particular and the general public.
In my attempt to achieve the aforesaid objective, the study was divided into five chapters. However, each chapter is further split into various subheadings for better presentation and clearer understanding.
There was much concentration on the evaluation of the internal control procedure for requisition, purchase, reception, storage and issue of materials, inventory control, management and valuation. The hypothesis was accepted based on the analysis of the data collected and test therein.
Stock work-in- progress otherwise known as inventories are defined by the international accounting standards (IAS)
No2 as tangible property.
(a) Held for resale in the ordinary cause of business
(c) To be consumed in the production of goods or services for such sale.
This stock and work-in-progress cannot be the stock of raw materials, finished goods, component parts utilized in the production process and the items that have begun the production cycle are yet to complete the production process.
Survey carried out by the accountants of international study groups in 1968 showed that stock and work-in-progress broadly called inventories, generally constitute after fixed assets, the largest balance sheet in the financial report of manufacturing firms. Expressed as percentage of net assets after depreciation, the size of such inventories is assessed at twenty six percent (26%). According to J.Fred Welton and Eugene F. Brigham,, although various occur, inventories to sale ratio is usually concentrate in 12%-20% range. As we know in accounting, opening stock plus purchase less closing stock equal the cost of goods sold this figure when subtracted from sales produces the gross party. Thus, accounting for stock and work-in-progress is of particular importance to the management of a firm since such treatment will affect both income measurement and financial statement. Adequate management and control policies enhance the growth and working capital policy of any firm