Indirect or Suspense Expenditure.

The principal item under this heading is stores. All stores and materials are under the control of the Stores Branch. No debits are made in the expenditure accounts for stores and materials until the actual goods are issued out of stores stocks, i.e., all stores purchased are debited to an Indirect or Suspense account and all issues are credited to this account. The debit balance is represented by actual stock on hand. Stores Branch expenses are distributed by means of a percentage commission on all stores issued. This ensures that the accounts record the correct cost of all stores and materials used.

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Workshops expenditure also comes under this heading. The whole expenditure incurred in the workshops is debited to a shops clearing account which is credited with the value of the output.

Overhead charges including interest on the capital cost of shops and plant, depreciation and insurance, are distributed over the output by means of a percentage commission.