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Semi finished accounting entry in Production order

Apr 26 at 02:36 PM

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Former Member

Hello All,

Have some basic question on accounting flow of semi finished goods in production order.

When we manufacture a SFG we consume Raw material and manufacture SFG ( Cr. RM INV Dr. RM Consumption Dr. SFG Inv Cr. SFG absorption)

When we manufacture a FG using this SFG entry will be ( Cr. SFG Inv Dr. SFG consumption Dr. FG Inv Cr. FG absorption)

question is are we not double counting the RM consumption twice by having a SFG consumption account on the financial statement? how do we clear out SFG absorption account as FG absorption will have most of the balance of SFG absorption . Do I need to have same account for SFG absorption and SFG consumption that way they clear out each other? it would be great if someone can help in giving some clarification around this.

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