The purchase of raw materials on account in a process costing system is recorded with a?

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Joe McHugh answered
Invoices are used to record the purchase of raw materials in an accounting process. Having a record of every transaction is essential in producing accounts and measuring profits or loss.

  • ACCOUNTING
    In every business it is essential to have receipts to document how the business is performing whether it is a large or small concern. The simple accountancy process is repeated throughout the world of commerce and allows fair comparisons to be made between different areas of a business and gives a truer reflection of profitability.

    By retaining receipts and producing accounts the profitability of a business can be monitored and audited. With standards in use throughout the world it makes comparisons between companies easy to follow.

  • SYSTEMS
    Standardized systems also mean that a fair comparison can be made within the same company of how different parts are performing without taking into account local factors. Using standardized procedures ensures that accounts are transparent and can be viewed by anyone qualified to do so. By laying out standard ways of measuring items, productivity and costs, a constant audit can be carried out allowing a firm to pinpoint the areas that they are strongest in and other areas that need to be looked at and improved upon.

  • COMPARISON
    With the universal acceptance of figures and procedures, proper comparisons can be carried out. If you are purchasing 100 kilos of bananas you can't compare in with 20 boxes from another area - by using a uniform system throughout the business you can make direct comparisons and be able to spend time and resources in the areas requiring most support. By following these standardized procedures, by invoicing and gaining receipts you will be able to produce accurate accounts to ensure maximum value throughout a business.

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