How to Account for Product Testing Costs

Save

If your business develops or manufactures products for sale, you may encounter two types of product testing costs. The first type of product testing is part of the research and development cost of creating and developing a new product. Research and development product testing allows you to assess the viability of a product and make changes to enhance or improve the product before mass production. The second type of product testing is quality assurance testing which is part of the manufacturing process. This form of testing allows you to ensure that each product manufactured meets the quality and safety standards of your original design.

Research and Development Testing

Create an R&D Product Testing account in the expense section of your accounting general ledger.

Record a decrease to the checking account for all monies paid for product testing expenses.

Record an increase in the R&D Product Testing account for all monies paid for product testing expenses.

Quality Assurance Testing

Create a Product Testing account in the Assets section of your accounting general ledger in the Inventory subsection. Product testing on products for resale is considered a cost of the manufacturing process and therefore increases the cost of the product held in inventory for future distribution.

Record a decrease to the checking account for all monies paid for product testing expenses.

Record an increase to the Product Testing account for all monies paid for product testing expenses.

Tips & Warnings

  • If you are not certain how to properly account for product testing costs, hire an accountant to assist you.

Related Searches

References

  • "Intermediate Accounting"; James Stice, Earl Kay Stice and Fred Skousen; 2004
Promoted By Zergnet

Comments

You May Also Like

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!