8/15/2019 Steps in Preparing the Process Account

1/1

STEPS IN PREPARING THE PROCESS ACCOUNT:

1. 

Debit the process account with all the costs incurred

2. 

Identify the normal loss (in unit and value). Credit the account

3. 

Determine the expected output unit

4. 

Determine abnormal loss or abnormal gain by comparing the expected output unit with actualoutput unit (Note: If the expected output unit is greater than the actual output unit, thus, it is an

abnormal loss, and vice versa).

5. 

If abnormal loss is incurred, credit the account with the units of abnormal loss. If abnormal gain is

incurred, debit the account.

6. 

Credit the account with the actual output unit.

7. 

Calculate the cost per unit of abnormal loss/gain and the actual output unit using the following

formula:

Cost per unit = Input Costs - Normal Loss Value

Expected Output Units

8. 

Enter the CPU for both abnormal loss/gain and actual output and calculate the value.

9. 

Ensure the total debit and credit of the account is balance /equal.

UNDERSTANDING THE TERMINOLOGIES

1. 

Normal loss

2. 

Scrap value

3. 

Waste

4. 

Abnormal loss

5. 

Abnormal gain

Prepared By:

Madam Sitti Syamsiar Muharram