h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Entry: Manufacturing Accounts Explained - A83388946
Author: Persephone - caffeine fuelled mad scientist - U4746644

I finally got around to writing a proper entry...I'm not sure if this is quite right(the format, not the information). I'm pretty sure there're no obvious mistakes in there at least.

I don't even know where to start with adding links in, since no one else seems to have anything edited about accounting at all.

*reads* Interesting stuff, Persephone. And welcome to Peer Review as it sounds like you've not been here before. This review looks lengthy but please don't think I'm being mean - I'm trying to make sure that the interesting content is presented in a way that is easy to read by a layman (like me).

I'm going to have to trust you about the factual accuracy as I'm not an accountant.



In terms of format, I would put the explanation above the sample account. At the moment I look at the stack of figures and have no idea what I'm looking at until I've read the paragraph beneath it.

You have two columns for your figures. I assume one is income and the other is expense - this needs to be noted somewhere (if that's actually what it is). At the moment I don't really understand why there are seperate columns or what the underlined bits refer to - remember you are trying to explain this to people who have never seen a profit and loss account before and don't know the conventions.

Also on the table side of things it needs to reflect the way you have divided up your explanation. It's pretty much there, it just needs a couple of extra gaps and bold headings to make the section headings stand out. I suggest (but you don't have to adopt):


Prime Cost - in bold
#
#
= - underlined

[gap]

Factory Overheads - in bold
#
#
= - underlined


[gap]

Stock of work-in-progress - in bold
#
#
= - underlined


[gap]

Final transfer price - in bold
#
#
= - in bold and underlined (as it's the final figure)

The same kind of idea could be used for the second table to make that clearer too.




"Combining the information from the Manufacturing Account calculates the cost of production."
--> do you mean combining the information from these three sections creates your Manufacturing Account?

"The provision is different from other expenses and behaves like most other provisions."
--> most of us don't know what a provision is, so we don't know how they would ordinarily behave.


I think that'll do for now as I think some of the problems with my comprehension are caused by me not being able to understand the tables. I really do look forward to seeing how this turns out. Accountancy is a tricky thing (I'm watching Mr Vip study his way through it and I stopped being able to follow most of it by about module three).

for tackling a tricky subject.

Vip

You've got a couple of the figures wrong in the first section, as you've missed out the final 0. That means you've 5010, instead of 50100, and 2100, instead of 21000.

*bump*

Finally found the time to give this a second shot. Does is make more sense?

You caught me just before I went on holiday.

First thing - we tend not to have first person references. So where you write "Before looking at the account, I’ll explain the layout." it could do with aa rewrite to something more general, such as "Before looking at the account, an explanation of the layout." Doesn't need to be major rewrites, just needs to de-personalise a bit.

"Less closing stock of raw materials" - should this figure be subtracted, not added, to the total?

Should the transfer price of the first table match the transfer price of the second? If they are supposed to be different, why are they different? Also, on the second table there are two things that appear to be transfer prices - should it be 94340 or 94540?

Unfortunately the whole last paragraph makes my head go swimmy. Sorry.
I think it doesn't help that I still don't really get what a provision is. Is it like a seperate bank account? Or is it an arbitrary amount of money that is always in there, but can be added to or subtracted from depending on the circumstances for that year?

I think the explanation sentences at the end actually muddle things a little. I'll have a go and see if I can come up with something a little simpler. Feel free to use it or not, totally up to you.

"After that, only the difference between last year and this year are added (or subtracted) from the provision. There is no need to create a brand new provision each year."

I think this is starting to take shape.

Vip

Hi

I haven't done this peer review thing before but I professionally explain accounting to people and I think you've got too much here. Linking the published accounts and the internal accounts is cool but presumes people understand the published accounts. Could this be 2 entries?

Things like transfer pricing are interesting (especially if you consider the impact on decision making) but rather glossed over here. I'd suggest making this a more focused article.

Also the terms you use are based on UK accounting standards and listed companies now use international accounting standards so terms like stock, profit and loss account, and trading account have been replaced. Obviously both sets of terms are still used but it might be worth mentioning the change.

The term provision also has a very precise technical definition (again worthy of an article on its own) and I'd be tempted to remove reference to the provision to aid understandability. It's not crucial to the points that you are making.

Storm

Hi there Storm

Thank you so very much for your review. This is exactly why peer review is so important - because we can take into account ( excuse the unintended pun here) views from experts in the field.

I'm not sure that we'd want to be looking at more than one Entry here, as I presume this Entry is only meant as an introduction to this probably vast subject. Your contributions will be invaluable to ensure that anything that is eventually published should not be misleading or incorrect.

Lanzababy

bump

Are you still working on this, Persephone?
It definitely shows promise - have you taken the previous comments into account?

<BB<

I see persephone is back Let's hope she has time to take this a little further.

Sadly it seems that persephone is no longer interested in this Entry, so it's being sent back.