MANUFACTURERS' ACCOUNTS.—A manufacturer is one who, by the application of labour, converts raw materials into finished products for sale ; the labour employed was originally entirely manual, or physical, but appliances, albeit crude, make their appearance at a very early stage, and as they are brought nearer to perfection and efficiency in any particular branch of industry, will usually tend to oust manual labour from its hitherto predominant position. The employment of "plant and machinery," coupled with the use of steam, electricity, and other forms of non-muscular energy, will, in practice, diminish the cost of production of saleable articles, and permit them to be produced in larger quantities : the effect 4is thus, at least as far as the earlier employers of mechanism, to increase profits for the time being.
There are many different forms of undertaking commonly grouped under the heading " and their operations range from absolute simplicity to the extreme of complexity. Differences in a technical sense affect the system of accounting which is to be suitable to record the operations, and hence it must be predicated that no one system of accounts can be devised which will be exactly applicable to every manufacturer's business. General principles exist, however, common to most businesses of the productive type, and upon those principles the main outlines of manufacturing accountancy can be laid down, with the proviso, however, that further elaboration will usually be needful in each particular case, in order that the full benefit of a proper system of record shall be derived.
The books employed by a manufacturer in recording his transactions can usually be divided into two classes; viz., those which form part of the system of account, and those which are accessory or statistical. The former are those which, correlated among themselves, lead up to the preparation of a balance sheet and the profit statements usually appended thereto, while the statistical books are those employed to contain a great part of the detailed record which the financial books cannot as a rule include, to explain many of the totals comprised in the latter, and to record many portions of the technical operations of the business.
It will be of advantage to consider these two classes of record separately, and the financial books, being in effect the main stream of account, claim prior consideration.
Of the two methods of bookkeeping, viz. " single entry" and " double entry," it is only the latter which merits serious discussion, not only in manufacturing undertakings, but in every class of business. In the case of factories the usual objection to the use of " single entry," viz., that it does not show how the profit arises, applies with more than usual force, inasmuch as it is vital for a manufacturer to know all that can be known as to the cost of production and as to how his profits arise.
Assuming, then, the employment of the double entry method, it remains to be stated that, in its application to manufacturing undertakings, it will be found to contain much which is peculiar io that type of business, but also various principles and methods which are common in all cases where bookkeeping by double entry is employed. It is that part of the subject which is peculiar to manufacturing industries which it is the object of this article to explain, and consequently information as to principles which are of universal application should be sought under the general heading applic able to each particular case.
The financial books usually employed in a manufacturer's office are :— 1. Cash Book ; 2. Ledger ; 3. Journal ; 4. Bought Journal ; Sold Journal; 6. Returns Books (inwards and outwards); 7. Petty Cash Book ; 8. Bill Books. As regards these the following remarks may be made : 1. Calla Book.—The form will be that usually employed, with the addition of such analysis columns on either side as will tend to minimise posting.