| A | B |
|---|
| Service business | Fulfills people’s wants and needs primarily through the effort of people providing services, not inventory or merchandise |
| Merchandising business | Fulfill people’s wants and needs by providing tangible items called inventory or merchandise |
| Manufacturing business | Buys materials and uses labor and machinery to change the materials into a finished product for sale |
| Direct materials | Materials that are of significant value in the cost of a finished product and that become an identifiable part of the product |
| Direct labor | Salaries of factory workers who make a product; as well as salaries of persons working directly on a product |
| Factory overhead | All expenses other than direct materials and direct labor that apply to making products |
| Indirect materials | Materials used in the completion of a product that are of insignificant value to justify accounting for separately |
| Indirect labor | Salaries paid to factory worker who are not actually making products |
| Materials inventory | All materials to be used in the production process |
| Work in process inventory | Products that are being manufactured but are not yet complete |
| Finished goods inventory | Manufactured products that are fully completed |
| Periodic inventory | A system which updates inventory on a periodic basis such as monthly, quarterly or annually |
| Perpetual inventory | A system which updates inventory on a continuous basis; an ongoing maintenance of stock |
| Materials requisition | Prepared to request materials, both direct and indirect, for a specific job |
| Materials ledger | A record of all materials to be used in the manufacturing process |
| Job time record | Prepared to record employee time for each job |
| Cost sheet | Contains all specific job costs, including Materials, Direct Labor, and Overhead, for products manufactured |
| Finished goods ledger | Prepared to account for all Finished Goods/ Products manufactured |
