A standard cost accounting system is a double-entry system of accounting. In this system, companies use standard costs in making entries, and they formally recognize variances in accounts. Companies may use a standard cost system with either job order or process costing.
In standard cost accounting system, companies journalize and post standard cost, and they maintain separate variance accounts in the ledger.
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The largest intangible asset that appears on a company’s balance sheet is goodwill. Goodwill represents the value of all favorable attributes that relate to a company.
- Income summary
Income summary refers to a temporary account used in closing revenue and expense accounts. The resulting net income or net loss from this account will be transferred to owner’s capital.
- Target net income
Target net income is the income objective set by the management. It indicates the sales necessary to achieve a specified level of income.
- Paid-in capital
Paid-in capital is the total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.
Under the straight-line method, companies expense the same amount of depreciation for each year of the asset’s useful life. It is measured solely by the passage of time.
- Extraordinary items
Extraordinary items are events and transactions that meet two conditions: They are (1) unusual in nature, and (2) infrequent in occurrence.
- Last-in, First-out (LIFO)
Last-in, First-out (LIFO) method is an inventory costing method that assumes the costs of the latest units purchased are the first to be allocated to cost of goods sold.