Accounting for Manufacturing Companies in UAE

ACCOUNTING METHODS

A reputed accounting firm can focus on the accounting tasks and make you free when you focus on the core areas. They ensure that your accounts are fully compliant. They also save your time by preparing your tax filing and payroll. Given below are the common accounting methods adopted by the experts. As per the international standards and reporting framework accounting for manufacturing companies consists of mainly 2 aspects; inventory valuation and cost of goods sold. These aspects follow simplified levels of understanding:

Inventory valuation

A manufacturing company consists of a set of raw materials which are the core part of the production process, and some products remain work in progress for the completion of activities. 

Major Inventory in Manufacturing companies includes:

• Raw materials: The essential component for the production process. Direct materials which are inevitable for manufacturing goods.
• Work in Progress: Incomplete processes held within the manufacturing unit are known as work in progress.
• Finished goods:  the goods which are completely ready for sale in the markets and are taxable in nature.

Cost of goods sold recognition

Cost of goods sold is one of the highest expenses that a business organisation suffers. It is mathematically calculated by using the formula opening stock plus purchases less closing stock. The matching principle can be used for this recognition. It must be considered as the foremost offsetting expense. It occurs prior to selling and administrative expenses and to be considered earlier. The factors which influence the cost of goods sold are:

• Fluctuating purchase price of raw materials 
• Varying labour costs based on geographical locations
• Product mix 
• Methods of overhead allocation 
• Cost layering methods like FIFO and LIFO
• Scrap and spoilage after production

Why Accounting plays a Vital Role in Manufacturing Industry?

In manufacturing industry accounting is inevitable in part due to the high range of operations and activities of sales. Implementing a well-structured accounting for manufacturing companies helps in:

• Tracking income and expenses related to production and Preparation of SOA for suppliers
• Helping with Salary processing and maintaining payroll file
• Reconciliation and Extraction of monthly expenses report
• Provide suggestions in Price fixations to the products based on various costs incurred.
• Reduction of overstock and bottlenecks through a perpetual inventory system.
• Implements internal control procedures to avoid fraud and errors

How CDA helps you?

As an accounting and auditing team, CDA experts can help you in data management, analysis and finalization of financial statements in a timely manner. Our expert can help you to choose the right accounting software and a cloud-based system for easy access. Our accounting services for manufacturing companies include:

Accounting & Bookkeeping services to track data

To set a right accounting system for your business you need to maintain the following information in a systematic manner. We help you to sort the data under Assets and liabilities, Expenses and revenues, Cash, Inventory, etc.

Internal Audit Services

CDA team recognises that an effective internal audit service can make a very positive contribution to the management of risk and the smooth operation of the business. CDA provides the following services in Internal Audit to its clients: Risk calculation, Process review and documentation, Testing of controls, Reporting to management.

Financial Analysis and CFO Services

As a part of accounting services, it is necessary to analyse the process of manufacturing to maintain efficiency and productivity in functioning. Based on the analysis financial advice is provided. There are different types of analysis which measure the efficiency which includes: Cost analysis, Variance analysis, Constraint analysis, Profitability analysis.

VAT Consultancy Services

Tax payment is compulsory for any business in UAE as this revenue is used for the development of the country. Tax accounting services ensure that companies and individuals comply with tax laws by filing their tax returns. A single fault in the accounting process may lead to a heavy business loss. So, individuals or companies must be extra vigilant while preparing a Tax Account.

CDA Services

CDA offers quality accounting services for manufacturing companies in Dubai and UAE. We provide cost-effective value-added solutions to meet all business needs of manufacturing companies. We have qualified & dedicated professionals with an innovative and commercial approach to meet today's highly challenging business environment. We have wide experience in providing accounting services to manufacturing companies across the UAE. Besides providing accounting services for manufacturing companies, we provide various other services including Bookkeeping, VAT Consultancy, TAX, CFO Services, Management Accounting and Internal Audit.