Production Cycle Essay Sample
- Pages: 2
- Word count: 390
- Rewriting Possibility: 99% (excellent)
- Category: production
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Introduction of TOPIC
The production cycle is a set of business activities and data processing operations associated with the manufacturing of products. Louwers (2007) points out that “the production cycle is closely linked to the acquisition cycle in which goods and services are purchased and to the revenue cycle in which the inventory is sold (p. 328). As products cycle through the stages from raw goods all the way through finished goods, the production cycle is concerned with how to account for the goods at each stage. There many areas that in this cycle where goods can be understated or overstated affecting the financial statements of the company. Therefore, there need to be internal controls in place to discourage inaccurate accounting practices and overstatements.
A production plan is the typical start of t
he production cycle and starts with managers signing off on the use of the raw materials before they
The cost accounting supervisor should be involved in the reporting of the production cycle at the end each quarter, season, and end of year. The summary entries should be reviewed by the supervisor frequently so entries that look to be incorrect can be traced back to their origin and corrected if needed prior to submitting final numbers to the accounting department. This will help ensure human errors in processing are caught and serves as a double check ensuring the financial statements are as accurate as possible before the numbers are presented or reported.
Louwers, T. J., Ramsay, R., Sinason, D., & Strawser, J. (2007). Auditing and assurance services: A look beneath the surface (2nd ed.). New York, NY: McGraw-Hill.