The following documents or records are used “on recording the store items:
A. Bin Card
B. Stores Ledger
C. Stores Issue Requisition
D. Bill of Material
E. Material Transfer Note.
A. Bin Card
After inspection of materials, the approved materials are received by the keeper. These materials are stored in bins, racks, almirahs and other equipments provided for the purpose. For systematic storing, each type of mate kept in different bins, racks, almirahs, etc.
It may be noted that a bin is a place, i.e, a rack, a shelf, an admiral or an op place where goods are stored. For each bin a card is maintained containing the of materials only and updated by the store-keeper. Bin card is prepared in dup’!* One card is attached to each bin and the other remains with the store-keeper.
A bin card is a quantitative record of receipts, issues, and balances of m:‘J in stores. The bin card is attached to the bin or rack in which materials are sty.
It enables to know the quantity of materials in hand at a glance . Bin card maintained by the store-keeper. This card is used not only for recording receipts issues of stores but also assists the store-keeper to c6ntrol the stock. A bin card the store-keeper to prepare purchase requisition to replenish the exhausted material. It also helps in locating the discrepancy when physical stock verification; undertaken and the balance compared with bin card.
It contains particulars such as number, description of material, code number of material, maximum, minimum, order and danger levels.
Benefits of a Bin Card
Bin card has the following benefits or utilities:
(i) As the most important store record it gives up-to-date record of receipt, sits and closing balances of items of stores.
(ii) It is helpful in placing requisitions for replenishment as when necessary. Re-ordering quantity is also available in this card.
(iii) It makes Perpetual Inventory system meaningful by reconciling physical stock with balance shown in the bin card.
(iv) It helps to control material cost with minimum investment as the storekeeper keeps the stocks within the prescribed limit.
(v) It discloses at a glance to any one in the stores about the quantity balance of stock. It helps in a system of internal check as many information relating to store keeping is available from bin card.
B. Stores Ledger
A stores ledger is a record of materials showings receipts, issues, and balances I of materials in quantities and value. It is maintained by the Costing Department and is outside the control of store-keeper. This ledger is maintained in order to ensure correct 1 stores accounting.
This ledger is usually of loose leaf or card type and each account represents an item of materials. The sheets are numbered serially and initiated by a responsible official so as to avoid the risk of removal or loss. In some concern, the stores ledger is maintained in bound volumes so as to rule out the possibility of loss of folios.The specimen of stores ledger is given below:
Benefits of Stores Ledger
The benefits of stores ledger are given below:
(i) It is an account record which provides information about receipt, issue nod balances both in quantity and value.
(ii) It is maintained centrally in cost office from where consolidated.: information may be made available.
(iii) It constitutes a. check on the quantity recorded in bin card.
(iv) Frequent overall review of stores balances may be conveniently made with the help of stores ledger.
Difference between a Bin Card and a Stores Ledger
A stores ledger differs from a bin card in the following respects:
(1) Bin card records particulars of materials only in quantities.
(2) It is maintained in the stores by the store-keeper.
(3) It is normally kept inside the stores and it is used for controlling materials.
(4) Entries are posted before the transactions take place.
(5) Entries are posted individually.
(6) Entries are made on the basis of quantity received or issue.
Stores Ledger records particulars of materials both in terms of quantity and value.
It is maintained by the cost accounting department by the Accounts Clerk.
It is normally kept outside the stores and it is used to determine the value of materials, i.e., pricing of materials issues.
Entries are posted after the transactions take place.
Entries are posted periodically.
Entries are supported by material received note and material requisition note.
According to this system, a certain quantity of materials termed as reserve stock is set apart which is not used for daily use. Under this system two bins are used. The first bin is known as “running bin” which serves the purpose of day-to-day issues. The key second bin which is known as “reserve bin” is set aside with certain quantity of materials.
The reserve stock is set apart by taking into account the time taken by the o supplier to deliver the materials. When the materials in the running bin exhausts, the materials in the reserve bin is used for issuing them. This serves as a caution for the store-keeper to place a purchase requisition.
Reconciliation of Bin Card and Stores Ledger
After making necessary entries in the bin card, the receipt and issue document are valued and handed over to the stores ledger clerk for posting in the ledge Normally, there should be no difference between the balances disclosed in the twos of records. But in practice difference arises due to the following reasons:
(i) There may be some arithmetical error in working out the balances.
(ii) There may be posting in the wrong bin card or in the wrong sheet of stores ledger.
(iii) There may be posting of receipt documents in issue column or vice v..
(iv) There may be complete omission of posting a document either in a card or in a stores ledger.
(v) There may be some temporary entry only in bin card or stores ledger. C. Stores Requisition
The store-keeper is required not to issue any material unless he is d; authorized by the competent authority. “Stores or Material Requisition is authorization to a store-keeper to issue materials or other stores.” This is use. prepared by the foreman of the production department.
The contents of Stores Requisition are:
(i) Number and date of requisition.
(ii) Name of the section requiring the materials.
(iii) Particulars and code number of materials.
(iv) The quantity of material demanded and its unit of measurement.
(v) The rate at which issue is to be made.
(vi) The total value of materials.
(vii) Authority for requisition.
The specimen of stores requisition is given below:
ABC Company Ltd. Stores Requisition Note
D. Bill of Material
A Bill of Material may be defined as, “a document containing a complete list of materials and components required for manufacturing a particular product or for a particular job, process or work-order”. It is also known as ‘Specification of materials’,
Bill of material often serves the purpose of Material Requisition as it contains the complete list of materials required for a particular job. But a Stores Requisition cannot replaces a Bill of Material.
A. bill of material is a schedule of materials required for each job, process or operation. It gives the details, of materials necessary like material specification, weigh and the quantity of each item. The bill of material is prepared by production or planning department as soon as the order is received. It is a requisition to the stores department for supplying the desired materials in proper time.
The specimen of Bill of Material is given below:
ABC Company Ltd Bill of Material
Job Order No.
Prepared by Checked by
Advantages of Bill of Material
(i) It serves the purpose of an advance intimation to all concerned of the order to be executed.
(ii) It acts as an authorization for issue of materials from store.
(iii) It serves the production department as an authority to place material requisition.
(iv) It may be used as a guide for controlling consumption of materials as it provides detailed list of materials required. >’
(v) It is possible to calculate material cost of all articles before their production.
(vi) It may be used as a basis for passing accounting entries in the stores ledger and cost ledger.
E. Material Transfer Note
Material Transfer Note is prepared when materials or equipments are transferred from one sub-store to another sub-store or from one production section to another or from one job to another in the factory. Normally inter department transfer is not allowed. However, it may be encouraged in the following situations:
(a) Where the surplus materials ark of very heavy weight and involves more handling expenses.
Where production is not to be stopped due to want of materials.