Direct Cost Applied Account?

Hi, Can anyone enlighten me what the Direct Cost Applied accounts are for? Oliver

This account is used to post the balancing entry for Inventory while you are making any purchase transaction.

Would the balance in this account eventually be reversed out? If yes, when would that be done? What is the double entry? There are also other cost applied accounts (i.e. labor, energy, fixed cost production etc.) when output journal is posted. All these accounts of similar nature to the above one relating to purchases? Oliver

yes, it will be reversed as your COGS when u r posting sale.

I checked the GL entries relating to output postings to COGS but do not see Direct Cost Applied accounts. Are they reversed when the “Adjust Cost - Item Entries” batch is run and variances are posted?

G/L Accounts in the General Posting Setup COGS account: To post the inventory decrease due to sales to the income statement. COGS account (Interim): To post the expected inventory decrease due to sales to the income statement. Only when using expected cost posting. Inventory Adjustment account: To post inventory increases and decreases occurred due to adjustments, revaluations and rounding to the income statement. Inventory Accrual account (Interim): To post expected inventory increases and decreases. Direct Cost Applied account: To post the direct costs to the income statement. Overhead Applied account: To post the indirect costs to the income statement. Purchase Variance account: To post the difference between the standard cost and the direct unit cost to the income statement. G/L Accounts in the Inventory Posting Setup Inventory Account: To post the inventory value to the balance sheet. Inventory Account (Interim): To post the expected inventory value to the balance sheet. Direct Cost are recorded with Purchase transactions. COGS are recorded with Sales transactions. Detailed information is available in the W1 3.60 Inventory Costing Training manual. The quick reference guide “Accounting 1” at at quickstudy.com or accounting text books can be used to help with accounting principles.