Question

In the chapter about spoilage,

material control, work in process control, manufacturing overhead control, loss from abnormal spoilage, are they belong to asset or equity?

Answer 1

Answer:

In cost accounting control accounts are temporary accounts. Typical control accounts are Material Control, Work in process control, Overhead control. These control accounts are holding places for costs. The costs are routed through control accounts. The final balance in control accounts are moved to other accounts.

Material control, Work in process control, Manufacturing overhead control are inventory accounts and as such are Asset accounts.

Loss from abnormal spoilage is reported separately and charged off in Profit and Loss account as expense. As such it is Equity account.