Balances of Production Accounts in the G/L

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Posted on by john.ellis

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Hi:

Are G/L accounts, such as Labor and Overhead in a manufacturing environment, supposed to show credit balances -- for all transactions that have accumulated?

If not, then what would be the cause of this discrepancy?

Thanks!

John

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john.ellis 3,482 on at

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RE: Balances of Production Accounts in the G/L

Thanks, Kim! That answers the question perfectly!

They're all credits. I would have just thought that they would have been debits, similarly to Cost of Goods Sold.

But, I do see why. Work In Process in inventory gets debited. So, that makes sense.

Thanks, again!

John
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Dallefeld 11,425 User Group Leader on at

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RE: Balances of Production Accounts in the G/L

Typically we do see these as credits. The reasoning is that you are 'applying' labor and overhead costs into the cost of items and in effect reducing the total labor and overhead costs with the increase in inventory value. To have a positive number, I would first question is manual entries are being made into these general ledger accounts and if so, I would turn off direct posting.