Show all



SKU: ACCT00120 Category:


: Chapter 1 – 5
: 133 Pages
: #3, 000
: Ms Word format

This study,ACCOUNTING FOR STOCK AND WORK-IN-PROGRESS IN MANUFACTURING FIRMS contains concise information that will serve as a framework or guide for your project work. The project study is well-researched for academic purposes and are usually provided in complete chapters with adequate References.




This study is designed to portray the theory and practice in respect of the accounting for stock and work-in-progress is in manufacturing firms. It is helped that the knowledge presented by this study will tremendously be useful to manufacturing firms in particular and the general public.

In my attempt to achieve the  aforesaid objective, the study was divided into five chapters. However, each chapter is further split into various subheadings for better presentation and clearer understanding.

There was much concentration on the evaluation of the internal control procedure for requisition, purchase, reception, storage and issue of materials, inventory control, management and valuation. The hypothesis was accepted based on the analysis of the data collected  and test therein.


CHAPTER ONE                     

1.1        Introduction

1.2        Statement of problem

1.3        Objectives of the study

1.4        Significance of study

1.5        Scope and limitation

1.6        Hypothesis

1.7        Brief history of Emenite limited Enugu

1.8        Definition of terms


CHAPTER TWO                                       

2.1.0    Control and revision of stock budget

2.1.1    Investigation of variances

2.2      Stores Control

2.2.1   Purchasing

2.2.2   Reception and inspection

2.2.3   Storage

2.3      Valuing material issues and stock

2.3.1   First in first out (4 Ifo)

2.3.2   Last in fits out (Lifo)

2.3.3   Average Price Method

2.3.4   Standard price

2.3.5   Replacement price

2.3.6   Specific or unit price

2.3.7   Highest in first out and next in first out

2.3.8   Inflation price

2.3.9   Stock evaluation

2.4       Inventory Control

2.4.1    The relevant cost in inventory control

2.4.2    The economic order quantity

2.4.3    Safety stock: minimum or buffer stock

2.4.4    The maximum stock

2.4.5    Computation of safety stock and maximum stock

2.4.6    Re order level


CHAPTER THREE                                              

3.1        Methodology

3.1.1     Sources of data

3.1.2    Primary data

3.1.3    Secondary data

3.1.4    Oral Interview

3.1.5    Methods used in designing the questionnaire

3.1.6   Research Instrument

3.1.7   Questionnaire validity

3.1.8   The population

3.1.9    Sample size

3.1.10   Methods of analysis


CHAPTER FOUR                                                         

4.1        Presentation of data and analysis

4.1.1     Question

4.2        Hypothesis testing

4.2.1     Calculation of Chi-Squared

4.2.2     Interpretation of data


CHAPTER FIVE                                                            

5.0        Summary

5.1        Conclusion

5.2       Situation Report (Finding)

5.3       Recommendation



Interview question



Stock work-in- progress otherwise known as inventories are  defined by the international accounting standards (IAS)

No2 as tangible property.

(a)        Held for resale in the ordinary cause of business

(b)        In the process of production for such sale or

(c)         To be consumed in the production of goods or services for such sale.

This stock and work-in-progress cannot be the stock of raw materials, finished goods, component parts utilized in the production process and the items that have begun the production cycle are yet to complete the production process.

Survey carried out by the accountants of international study groups in 1968 showed that stock and work-in-progress broadly called inventories, generally constitute after fixed assets, the largest balance sheet in the financial report of manufacturing firms. Expressed as percentage of net assets after  depreciation, the size of such inventories is assessed at  twenty six percent (26%). According to J.Fred Welton and Eugene F. Brigham,, although various occur, inventories to sale ratio is usually concentrate in 12%-20% range. As we know in accounting, opening stock plus purchase less closing stock equal the  cost of goods sold this figure when subtracted from sales produces the gross party. Thus, accounting for stock and work-in-progress is of particular importance to the management of a firm since such treatment will affect both income measurement and financial statement. Adequate management and control policies enhance the growth and working capital policy of any firm

          Inventories must be maintained so that a customer may be served immediately or at least quickly enough so that he does not turn to another source of supply on the other hand, production operation cannot flow smooth without inventories or work-in-progress, direct materials, finished parts and supplies. Thus inventories are used to absorb expected fluctuations in demand. This help the different part of the  organization to be less dependent on each other enabling each to function effectively. The accounting task is essentially one of keeping track of all production cost incurred “under the factory roof” from the time raw materials are purchased to the time finished goods are shipped to customers. This, however includes the over heads incurred in bringing the inventories to their present location and condition which form part of the conversion cost. The necessity for adequate stock and work-in-progress recognizes the importance of optimum investment in stock and work-in-progress.

This helps to avoid the problems and cost of carrying too bulk or too large inventories.

According to J. Fred Weston and F. Eugene Brigham “ the major determinants of investment in inventory are the level of sales, length and technical nature of the production process as well as durability versus perishability in the end product”. The movement of inventories from both receipts, issue and use need care and a measure of internal control. Usually a bincard system is used and from the records a new running balance is always maintained closely related to this perpetual inventory system is then compared with those of the bin-cards and store-keeper by a store audit check

Discrepancies are investigated and adjustments made. The basis on which inventories are value for both charging to the manufacturing account and inclusion in the balance sheet may vary. Different method will suit firms in different industries and situations. But it must be stressed that once a firm has close to use the method, then, it should act consistently and not changing from one method to another without good reason. This is because the valuation of current assets, working capital and the financial position in general. However, the choice of valuation base will  consider the requirements of the Nigeria Accounting standards and those of the board of inland revenue. The author  of this project work deeded to under take the study stock and work-in-progress because of the far reaching effects of such stock and work-in-progress on the manufacturing firms, their owners and other users of the information.


As aforementation, stock and work-in-progress constitute after fixed assets, the largest balance sheet  item in the financial report dog manufacturing firms planning for stock and work-in-progress is an important function of the management which aims at avoiding stock- out or carrying excessive stock production purpose.  Stock-out costs are the costs incurred when there is a shortage of materials and consequently stoppage of production including:

(a)        Loss of goodwill

(b)        Loss of sales revenue

(c)         Payments of wages to idle workers and

(d)        High cost of replenishment

On the hand, excessive stock leads to a high holding cost which is represented by

(a)        Insurance premium

(b)        Handling costs

(c)         Pilferage, deteriation, damages, evaporation and obsolesce.

Interest on capital tied up that is the interest forgone in keeping the materials in  the warehouse (opportunity cost).

In our society several organizations exists without proper accounting for stock and work-in-progress. These organization buy materials at will and control stock levels by intuition or guess work. As a result, most organization either overstock or under stock materials in most organization, the stores department and purchasing department are neglected and internal control are poor. However, it does not mean that those organizations do not want to plan for stock and work-in-progress nor realize the need and importance of stock control and management. It is simply because of the death of raw materials experienced by most firms. This situation forces most firm to purchase raw materials in great quantities thereby  disregarding the regulatory system. The situation is worsened by the high exchange rate which tends to limit organization to only local sources of raw materials. Emenite limited for example, finds itself in this situation. It is therefore the objective of the researcher to examine how Emenite Limited a large manufacturing organization operates under these conditions of imperfection in relation to accounting for stock and work-in-progress


The objective of the study include:

(i)          To investigate, evaluate and draw conclusion on the accounting treatments accorded stock and work-in-progress in Emenite Limited Enugu.

(ii)         To ascertain the stock and work-in-progress of Emenite limited.

(iii)        To evaluate adequacy and effectiveness of inventory control and management in Emenite Limited including: valuation of issue to production and valuation of end of year stock, stock levels and  economic order quantity, to discover problem areas if any and make recommendation and how to improve on them.

In addition the result of this study is intended to provide thorough understanding of the theory and practice of accounting for stock and work-in-progress thereby educating the business world on matters of inventory control and  managements.


Since stock and work-in progress form a substantial portion of the working capital of manufacturing firms, the accounting treatment according to it is significant simply because such treatment will affect both income measurement and position statement. The accounting information provided by financial statements are used for financial and investment for tax purposes inventions for evaluation of investment viability and profitability shareholders for assessment of the management efficiency and return an investment financial houses for credit rating employers, ministry of trade and industry and the business world as a whole. The result of this study is intended to help improve the quality of financial statement. It will also be useful for future students of accounting or any person who may use it for reference while making a study on the topic or related topics.


A hypothesis is a statement or assumption about am unknown population parameter. A tead performance in order to verify whether a hypothesis is true or false is called a test of hypothesis. If the result obtained from the sample drawn from the population is consistent with the hypothesis being tested, we have to accept the hypothesis otherwise we reject the hypothesis. For the  purpose of the study, the accounting procedure adopted by Emenite Limited Enugu, for stock and work-in-progress is adequate. This hypothesis will be tested at the end of this study based on the information obtained and their analysis.


Emenite Limited formerly known as Turnere Asbestos Limited was established on the third day of October 1961. Emenite Limited belongs to a foreigner multi-national company. This means that it was not incorporated in “Nigeria” and thus does not have the title attached to the name. Emenite limited is based in Emene near Enugu in Enugu State of Nigeria. Emenite Limited is a manufacturing company producing asbestors, fibre products such as loacter- pressure pipes. The company makes use of the following raw materials in its productive process. Cement (100%) local from Nigerian, Benue cement Markurdi  and the Eagle Cement port-harcourt, fibre (100%) input and wood pulp (70% lolad) from Nigeria Newsprint manufacturing company limited Okoroka, Akwa Ibom State.


Historical costs- The aggregate cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Production overhead – This comprises costs incurred from production other than direct material and labour

Internal Control – The whole system of control, financial and otherwise established by the management to enable it carry on the business if its enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness  and accuracy of the records.

Cost purchase – The comprise the purchase price including import duties and other purchase, taxes, transport and handling costs and any other directly attributable cost of acquisition less trade discounts rebate and subsidies.

Net realizable value (N.R.V)- This is  estimated selling price in the ordinary course of business less cost of completion and less cost necessary to be incurred in order to make the sale.

Conversion cost – These are the costs in addition to the cost of purchase that relate to bringing the inventories to their present location and condition

Economic order quantity (EOQ) – This is calculated re-order quantity which minimizes the balances of cost between carrying cost and ordering costs.

Relevant cost- Expected future cost that will differ among alternative,

Replacement cost- This is the cost at which an identical asset could be purchased on manufactured.

Standard price – A pre-determined price fixed on the basis of a specification of all the factors affecting that price.

Absorption costing – The practice of charging all costs both variable and fixed to operations process of product.

Standard costing – The preparation and use of standard costs, their comparison with actual costs and the analysis of variance to their causes and points of incidence

Marginal costing- The ascertainment of marginal costs and of the effect on profit of changes in volume of types of output by differentiating between fixed costs and variable cost.

Chi-Square (CI- Sqaured) distribution:- A statistical distribution that can be used to test if an observed series of values differs significantly from what was expected.



Have you made payment for this project? If YES, Get a Download Code by contacting our Customer Care.

If NO, Place an Order Now.

For further enquiries, call our Hotlines: (+234) 0816-531-2322, 0811-998-2823



Not the topic you are looking for ? Search here

DISCLAIMER: focus on attracting students and researchers to materials that can be used as guide, framework, and reference for their project work. All contents/materials on this website are for research purposes only and for no reason should you copy verbatim. This platform is not encouraging any form of plagiarism, neither are we advocating the use of the project materials for cheating. We strictly recommend that research project topics and materials ordered for should serve as a guide or framework only. The contents therein should be used to generate fresh ideas for your own research. Finally, will not be liable for any material used inappropriately.

Jumpstart your career and enhance your skills with Online Premium CoursesSTART A COURSE
+ +