backflush accounting

Show Summary Details

Quick Reference

A method of costing a product based on a management philosophy that includes having the minimum levels of stock available; in these circumstances, the valuation of stocks becomes less important, making the complex use of absorption costing techniques unnecessary. Backflush accounting works backwards; after the actual costs have been determined they are allocated between stocks and cost of sales to establish profitability. There is no separate accounting for work in progress.

Subjects: Accounting.

Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.