Meaning And Concept Of Containers Account
The word containers may be substituted for drums, boxes, packages, cases, crates, bottles, barrels, empties and cask in different and appropriate situation. The modern business can not be separated with containers. Products need suitable containers before they are sold to the customers. Normally, there are two types of containers viz. primary which is the part of the product and secondary which is need for distribution of goods to the customers.
When the containers are of primary nature its cost is included in the cost of production and there is no need to be returned by the customers. Therefore, no separate treatment is needed for such containers. But when the cost of the container is a significant portion of total cost, the charge of container is normally excluded in the price of product to allow the seller to compete with other competitors. The usual practice for such containers is that they are returnable in nature and are return by the customers with terms and conditions, a major portion of charge already taken from the customers, will be refunded to the customers. Therefore, the difference between the charged out price for containers and the refunded price is known as 'Hire charges'.
Objectives Of Keeping Separate Accounts For Containers
Containers require investment. Hence, a separate account should be maintained for containers. The separate account is not necessary fir non-returnable containers. But for returnable containers the separate account is necessary for the following reasons.
1. The separate account is necessary for controlling over the movement of containers. Time to time it needs reconciliation and the regular incoming and outgoing of containers must be recorded.
2. For an ascertainment of profit or loss arising out of containers also, the separate accounting is necessary.
The word containers may be substituted for drums, boxes, packages, cases, crates, bottles, barrels, empties and cask in different and appropriate situation. The modern business can not be separated with containers. Products need suitable containers before they are sold to the customers. Normally, there are two types of containers viz. primary which is the part of the product and secondary which is need for distribution of goods to the customers.
When the containers are of primary nature its cost is included in the cost of production and there is no need to be returned by the customers. Therefore, no separate treatment is needed for such containers. But when the cost of the container is a significant portion of total cost, the charge of container is normally excluded in the price of product to allow the seller to compete with other competitors. The usual practice for such containers is that they are returnable in nature and are return by the customers with terms and conditions, a major portion of charge already taken from the customers, will be refunded to the customers. Therefore, the difference between the charged out price for containers and the refunded price is known as 'Hire charges'.
Objectives Of Keeping Separate Accounts For Containers
Containers require investment. Hence, a separate account should be maintained for containers. The separate account is not necessary fir non-returnable containers. But for returnable containers the separate account is necessary for the following reasons.
1. The separate account is necessary for controlling over the movement of containers. Time to time it needs reconciliation and the regular incoming and outgoing of containers must be recorded.
2. For an ascertainment of profit or loss arising out of containers also, the separate accounting is necessary.
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