What Is a Carryover Basis?

Carry forward, or period-end carryover, refers to the transfer of the balance or balance of one account to another account at the end of the period. There are two accounts involved here, the former is a transfer-out account and the latter is a transfer-in account. Generally speaking, after the carry-over, the transfer-out account will have no balance.

carry over

The so-called "carry forward" is an important specific business in accounting work, usually it is a

Here are some examples: First, in order to settle the balance, for example, for the "finished product" account of inventory, to carry forward the production cost of the month, that is, the cost of canceling the sold product, the purpose is to find the current balance of the finished product; To calculate the cost of this period, there are many subjects that need to be carried forward, such as manufacturing expenses, basic production costs, auxiliary production costs, etc., which must be carried over to production cost subjects; again, in order to calculate profits, the current sales revenue , Sales costs, other business income, other business costs, non-operating income, non-operating expenses, income tax, product sales taxes and additional period expenses (administrative expenses, selling expenses, financial expenses) and other subjects must be carried forward Annual profit account; Finally, the balance of all accounting accounts should be carried forward to the next fiscal year at the end of the fiscal year.

In addition, there is a carry-over item in the market sales, which refers to the items transferred from the previous year to the items sold in the current year.

[Carry forward] ---- processing trade

Processing trade enterprises can apply to the customs to carry over the remaining materials to production and export under another processing trade contract, but they should be carried forward under the same operating unit, the same processing plant, the same imported materials and the same processing trade mode .

A processing trade enterprise shall provide the following documents to the customs when applying for the transfer of the remaining materials:

The written application for the enterprise to carry forward the remaining materials;

A list of the remaining materials to be carried over by the enterprise;

Other documents and materials required by the customs according to regulations.

Let's take the manufacturing industry as an example and discuss the carry-over entry in the Basic Accounting in conjunction with the process of capital movement. For simplicity, the following examples do not consider VAT.

Carry-over supply process

The supply process is the reserve stage of production raw materials, which refers to the procurement process in which the company pays the goods to the material inspection and storage bank. Example 1: Dongfang Company purchases 5000 kilograms of material A, the unit price is 10 yuan, the purchase cost is 500 yuan, and a transfer check is issued to pay for the goods. The materials have not yet been stored in the warehouse. Preparation of entries: Borrowing: material procurement (or materials in transit) 50500, loan; bank deposit 50500. Example 2: The above-mentioned materials are checked and stored in the warehouse and transferred at their actual cost. Borrow: 50500 for raw materials, Loan: 50500 for material purchases. Beginners of this carry-over entry can understand that materials in transit are reduced and inventory materials are increased, and materials in transit will be transferred to inventory materials. There are two points that need to be explained here: First, in Basic Accounting, because there is no material cost difference involved, there is no planned cost, so material procurement can be regarded as materials in transit. Second, the purchase cost of materials should include the purchase price and purchase costs.

Carry-over production process

The production process is the central link of the manufacturing operation process. The main content of its accounting can be summarized into three words: materials, labor, and expenses, which refer to direct materials, direct labor, and manufacturing expenses, respectively. This process mainly sets up accounts for production costs and manufacturing expenses. Direct materials and direct labor are directly included in production costs, borrowing: production costs, loans: payable wages, raw materials, etc., manufacturing costs are indirectly transferred to production costs. How to understand the indirect transfer of manufacturing costs? Manufacturing costs are a collective distribution account. The indirect costs incurred by the production workshop to produce products and provide labor services are first collected by manufacturing costs. Borrowing: manufacturing costs, loans: raw materials, wages payable, etc. Standard (such as production hours) allocations are carried over to production costs, that is, borrowing: production costs, loans: manufacturing costs. It should be noted that enterprises usually produce a variety of products, and the calculation of manufacturing costs is not only for cost control, but also to meet the needs of enterprises to calculate profit and loss. For this reason, the manufacturing expenses must be allocated and calculated into the product costs of each costing object in accordance with appropriate standards. Of course, if an enterprise produces a single product, the manufacturing cost can be directly included in the product cost, and there is no problem of distribution.

After a certain production and processing process, production costs are grouped in the debit of the production cost account. The debit amount is not the cost of the finished product this month, but the production cost incurred this month. The allocation between them is beyond the scope of Basic Accounting. For the sake of understanding, we usually assume that all products in the month are completed and put into storage, so that the actual cost of the products completed and put in storage this month is carried forward. Example 3: Dongfang Company produces A and B products (unit cost is 10 yuan). The debit amount of production cost is A: 10,000 yuan and B: 20,000 yuan. All products of A are unfinished and all of B products are completed. The transfer entry is borrowed: inventory goods-B 20000, credit: production costs-B20000. After the production is completed, all the expenses (material, labor, and expenses) collected by the production cost are transferred to the inventory commodity account. All products of A are not completed, and will not be carried forward, and will be processed next month. The production and operation costs of the enterprise need to be compensated from the income, the inventory products enter the market, and the currency is withdrawn, so that it will enter the next step-the sales process.

Carry forward sales process

Simply put, the business of the sales process is mainly reflected in two aspects. One is the increase in sales income, borrowing: accounts receivable, bank deposits, etc., and loans: income from main operations. The second is the reduction of inventory goods, that is, the carry-over of production costs of already sold goods. There is often a certain deviation in the understanding of the beginners here. Some students compiled entries to borrow: main business costs, loans: production costs, the problem mainly lies in the convergence of knowledge before and after, the production costs have been carried forward to the inventory of goods, so the processing made the mistake of repeated carryover. Inventory items are sold, and inventory items should be transferred to cost of sales. Under the manufacturing cost method, the cost of goods sold = unit production costs x quantity sold. Example 4: Dongfang Company sold 1,000 pieces to carry forward its cost of sales, borrowed; the main business cost was 10,000 (10 × 1000), and the loan: inventory goods 10,000. In addition, sales expenses, sales tax (referring to consumption tax, business tax, urban construction tax, etc.) will also occur during the sales process. It is worth mentioning here that the sales tax is carried forward. Example 5: Carrying forward sales tax of RMB 1,000 to be paid by Dongfang Company. Most beginners have no way to start this business. The sales tax borne by the enterprise is included in the tax of the main business and the debit of the additional account. The unpaid tax should be paid to form a lender that is included in the tax payable. Main business tax and additional 1000, loan: tax payable 1000, students need to be reminded that the general taxpayer's VAT is an extra-value tax, which has nothing to do with the current profit and loss, so the VAT does not pass the main business tax and additional accounts Accounting. As for other business that occurs during the sales process, it will not be described in detail here.

Carry-over financial results

Profits are the operating results of industrial enterprises for a certain period of time, and are an important indicator for comprehensively evaluating the economic benefits of enterprises. The carry-over of financial results is mainly two entries. One is that each income and income account is transferred to the lender of the current year's profit; the other is that the expense account is transferred to the current year's profit and is debited by the borrower: main business income, other business income, non-operating income Investment income, loans: profit for the year and borrowing: profits for the year, loans: cost of main operations, other business expenses, taxes and surcharges on main operations, management costs, financial costs, operating expenses, non-operating expenses, etc. For this carry-over entry, we can understand that the income account increased its profit for the current year, so it was transferred to its debit, and the expenditure account decreased its profit for the year, so it was transferred to its lender. We can also understand from another point of view that what is related to the profit account of this year are profit and loss accounts, and there is no balance after the profit and loss accounts are carried forward. The income account is usually registered with the lender. In order to level it, it should be carried forward to the borrower in the opposite direction. According to the debit and credit accounting rules, the borrowing: income account, loan: profit for the year. As for the carry-over of expenses and expenditure accounts, the opposite is true. Through the two above-mentioned carry-over entries, the difference between the lender and the debit of the profit account for the current year can be used to calculate the total profit (if the debit is greater than the lender, it is a loss). Based on this, the carry forward income tax can be calculated. Income tax is an expense and should also be deducted from the profit for the year, which is borrowed: profit for the year, loan: income tax. After this carry forward, the credit balance of the profit for the year is then Is net profit.

Carry forward year-end accounts

The balance of the profit account for the current year represents the accumulated net profit or net loss during the year. This account is usually not carried forward. It is transferred to the profit distribution one undistributed profit account at the end of the year. Borrow: profit for the year, loan: profit distribution- undistributed profit. Converse entries are made for losses. At the end of the year, each detailed account of the profit distribution has only undistributed profits with balances, and other detailed accounts need to be leveled. Borrow: profit distribution-undistributed profit, loan: profit distribution-withdraw surplus reserves, and distribute profits to investors. At this point, all carry-over entries can be put to a successful end.

Finally, it should be noted that in actual work, when the account book reaches one page, the total amount and balance are transferred to the next page, and the balance of the old account is transferred to the new account at the end of the year, which is also called carry-over.