Related departments in the company must examine their operations and make necessary modifications to support the new production system. There is no single accounting method best suited for different manufacturing environments.
Management has to decide the accounting method to use.
The accounting method must be able to provide correct and useful information to management and be as simple as possible. Conventional external reporting documentation, such as income statement and balance sheets, remain the same, but the internal reports, such as the performance measurement report, must be revised to support the new JIT system and to provide useful information. In this report, conventional accounting methods are reviewed first, in order to acquaint readers with the terminologies and practices of a cost accounting system. This is the primary reason for a modified cost accounting system. A survey of ten companies in North Carolina was also conducted.