Page 86 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Functions of Stores department

The important functions of the stores department are to:
(i) Receive and accept materials after properly verifying the documents,

(ii) Maintain materials in a orderly manner,
(iii) Carry out a reconciliation of stores balance as per bin card,
(iv) prevent unauthorized persons from entering the store,
(v) Maintain the materials properly in good condition,

(vi) Ensure that records relating to receipt, issue and balance are up to date, and
(vii) Issue materials only against duly authorized material requisition.

documents Used in Stores Procedure

Although the procedure followed for the purchase and storing of materials varies from industry
to industry and organization to organization, never the less there are certain routines which are
common to them. The following documents are generally used in stores procedure:
(i) Bin Card: This document is prepared by the stores department. On the receipt of materials,
the store-keeper places them in appropriate bins and makes necessary entries in a document
called bin card. This bin card is kept and maintained by the store-keeper to assist him in
the control of stock. Hence, it will be in the direct control of the store-keeper. It, therefore,
records the movement of materials from the stores and to the stores. It shows the quantity of
specified materials available in the bin at any point of time. Further, it may be noted here that
for each type of material, a separate bin card will be prepared. As soon as the materials are
received or issued, the store-keeper will make an entry in the bin card. Another important
aspect of bin card is that it keeps an account of only physical flow of materials.
Specimen of the bin card is presented below:

Kartik Company Limited
Bin Card
Description : …………………… Inventory Level : …………………
Material Code : …………………… Maximum Level : …………………
Stores Ledger Folio No. : …………………… Minimum Level : …………………
Date Receipts Issues Balance of Materials Audit
GRN Qty. SR Qty. Quantity on order Date Remarks &
No. No. Signature

(ii) Stores Requisition Note: As is known, the materials are stored in the stores department
for the purpose of issue to the production and other departments as and when required.
Hence, the store-keeper has to issue the materials to the production and other departments
but only on the production of an authorized letter called stores requisition note. When
material is issued, it will be recorded by the store-keeper in the issue column of the bin card
and the balance will be adjusted according to accounting procedure.

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