backflush accounting


backflush accounting
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

Accounting dictionary. 2014.

Look at other dictionaries:

  • Backflush accounting — is a product costing approach, used in a Just In Time (JIT) operating environment, in which costing is delayed until goods are finished. Standard costs are then flushed backward through the system to assign costs to products. The result is that… …   Wikipedia

  • backflush accounting — A method of costing a product based on a management philosophy that includes having the minimum levels of inventory available; in these circumstances, the valuation of stocks becomes less important, making the complex use of absorption costing… …   Big dictionary of business and management

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  • Just-in-time (business) — Just in time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in process inventory and its associated carrying costs. In order to achieve JIT the process must have signals of what is going… …   Wikipedia