Cost systems

While setting up a cost accounting system in the manufacturing companies, two questions’s answers that must be paid attention: What we produce? and How we produce?. Therefore, it is important to set up a cost accounting system in accordance with the description that mentioned below.

Job order cost system: The job order cost system is used by the companies which produce the product in parallel with the customer demand and generally the companies that does not produce the same product continuously. It is opened an order card and followed the production with the order cards. An order card is consist of sequential job orders.

Process costing system: The process costing system is used by the companies which do the mass production and produce the same products in the production line. It is measured the percentage of completion of the products and the semi-products. Thus, the completed products and semi products costs are calculated.

The key parameters of the financial statements

There are some parametres in the financial statements of a company that must be paid attention. The parametres provide some key details about the financial position of the company.

Balance sheet: Balance sheet shows the sources and the assets of a company. When you look at the balance sheet of a company, you first pay your attention to the company’s liquidty. If a company can pay its short-term liabilities with its current assets, that is very good key indicator for the company.

Income statements: Income statement shows a company’s incomes and expenses during in a period of time. The key parametre in the income statement are revenue and net profit. In case of increasing of revenue, net profits must be also increased. Otherwise, it is not mentioned that the company’s growing.

Cashflow Statement: Cash flow statement shows a company’s inflows and outflows from operating, investment and financing activities. The key parametre in the cashflow statements is whether the company gets cashflows from the operating activities or other activites such as the financing and the investment. As financiers, we expect that the company’s operating cash flow must be higher than the investment cash flow and financing cash flow. 

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