IV. Include the expenses of foreign investment in the cost and expense items
VII. Falsely record expenses, adjust costs
According to the principle of accrual basis, accounting calculations should accurately divide the boundaries of each month, but some enterprises violate regulations by including material expense expenditures that do not belong to the current period's product cost burden all at once into the current period's cost items. For example, a company purchased 100 tons of raw materials in March 1999 for 120,000 yuan. That month, 2.5 tons of these raw materials were used, but the company included the entire 120,000 yuan in the product cost, resulting in the company under-reporting its profit for the month.
II. Welfare expense expenditures squeezed into cost items
According to financial accounting regulations, fixed asset repair fees are accounted for using the accrual method and included in cost and expenses, but some enterprises control the amount of profit realized by repeatedly including workshop fixed asset repair expenses in production costs. For example, a company pre-accrued 30,000 yuan monthly for fixed asset repair fees and included it in production costs, but in order to compress excess profits, also included the actual expenditure of 450,000 yuan for equipment repairs entirely in production costs. At year-end, the accrued repair fees were transferred to the next year. This treatment resulted in an overstatement of the company's production costs by 360,000 yuan and an understatement of profit by 360,000 yuan.
Some enterprises include expenses that do not belong to product costs in direct material costs and other cost items. For example, enterprises regulate infrastructure project costs and product production costs through the incorrect practice of artificially over-counting or under-counting auxiliary production expenses to achieve their goals. For instance, a production enterprise directly included the materials used for self-construction projects as "direct material costs" with the accounting entry "Debit: Production Cost, Credit: Raw Materials." Such treatment includes expenses that should not be counted in costs and expenses, falsely reducing profit and violating the scope of cost and expense expenditures.
I. Basic construction materials used, included in product production costs
VI. Multi-period materials, allocated in one period
Some enterprises violate the scope of cost and expense expenditures by including expenses that should be covered by welfare funds in cost items, increasing costs and reducing profits. For example, a company included the wages of personnel in the welfare department as "direct labor costs" with the accounting entry "Debit: Production Cost, Credit: Accrued Wages."
Some enterprises transfer all the expenses provided by auxiliary production workshops for employee hospitals, canteens, schools, etc., such as water, electricity, steam, processing, and repairs, entirely to basic production workshops and enterprise management departments. If the auxiliary production workshop supplies water and electricity to the employee canteen for a total of 500,000 yuan, the company makes the accounting entry "Debit: Production Cost - Basic Production Cost 500,000, Credit: Production Cost - Auxiliary Production Cost 500,000," whereas according to regulations, it should be recorded in the "Accrued Welfare Expenses" account. As a result, product costs are falsely increased by 500,000 yuan, and the "Accrued Welfare Expenses" account omits 500,000 yuan.
Some enterprises, when investing in other enterprises in the form of materials, do not reflect this in the "long-term investment" account but instead include the reduced materials in cost and expense items. For example, a machine tool production factory invested its own steel in an automobile manufacturing factory with the accounting entry "Debit: Production Cost, Credit: Raw Materials." In doing so, on the one hand, it increases product costs, reduces profits, and pays less income tax; on the other hand, it conceals investment gains, again undercounts profits, and pays less income tax.
V. Repair expenses, repeatedly included in production costs
III. Welfare departments receiving services, no transfer settlement made
Here, the product cost we are discussing refers to the cost consumed by an enterprise during the production process for manufacturing products, also known as product manufacturing cost or production cost. Production costs mainly include three components: direct materials, direct labor, and manufacturing overheads. Expenses primarily refer to period expenses, including sales expenses, administrative expenses, and financial expenses.
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