Account 20 in accounting: meaning, postings and examples

“Main production”: account 20 in accounting

The organization's expenses that are allocated to carry out operations on the main types of activities should be attributed to a special accounting account 20 “Main production”.
It should not be assumed that such costs are associated only with production cycles. This accounting account is supposed to take into account the costs of selling products, performing work or providing services, which are enshrined in the constituent documentation as the main type of activity. In other words, Accounting Account 20 for Dummies is used to record expenses for the activities for which the company was created.

Meaning of account for accounting

This position in the Chart of Accounts, referred to as “main production,” is intended to summarize data on the costs incurred in the process of creating goods, works or services. In more detail, this position is used to account for costs such as:

creation of goods for industrial and agricultural purposes;
carrying out geological exploration, industrial construction and other works;
services related to the organization of transportation and communications;
carrying out research and development work;
repair and maintenance of highways.

The debit side of the company reflects direct costs associated directly with the company's main activities, as well as indirect costs and expenses of auxiliary production. In the first case, expenses are written off to accounts where production inventories, employee payroll, etc. are taken into account. If we talk about auxiliary production, then in this situation there is a write-off to account 20 from the credit part of position 23, referred to as “auxiliary production”.

If at the end of the reporting period there remains a certain balance at the designated position, then it reflects the value of work in progress. As for analytical accounting, it is carried out taking into account the type of costs and the type of products produced.

Features of accounting on an account 20

All expenses that the company incurs on its main activities or production are accumulated on active account 20. When accepting expenses for accounting, the accounting account is debited; when releasing finished products or providing services, the entries are credited.

A feature of accounting account 20 is that debit turnover cannot be greater than credit turnover. This means that the company cannot consume more raw materials than were written out from warehouses for the production process. Similar conditions apply to other types of expenses.

Postings to account 20 collect information about the cost of OP for the reporting period. In addition to inventories, the following can be written off as main production:

salaries of key personnel;
depreciation of equipment;
administrative staff salaries;
expenses for renting premises, paying for utilities;
other expenses.

Brief description of account 20

Accounting costs in account 20 depend on the main activity of the company. These may be expenses for the production of industrial or agricultural products, for construction and installation work, or for the provision of transport services. The purpose of accounting on this account is to form the full or reduced cost of the main production (hereinafter - OS).

Account 20 - Main production - is regulated by the Chart of Accounts, Instructions for its application (Order of the Ministry of Finance dated October 31, 2000 No. 94n), PBU 10/99 “Organization Expenses” and other accounting standards (methodological instructions, recommendations, guidelines) for accounting for production expenses and their reflection in reporting in the context of specific economic sectors (clause 10 of PBU 10/99, letter of the Ministry of Finance of Russia dated April 29, 2002 No. 16-00-13/03).

Account 20 in accounting is an active calculation account that does not have a negative balance.

The following types of production costs are distinguished:

acquisition of raw materials and materials for production, work, services;
workers' compensation;
depreciation and repair of fixed assets;
modernization and introduction of new technologies;
losses from marriage, etc.

If there is a positive balance at the end of the month, the account contains work in progress (work in progress, hereinafter referred to as WIP) - material assets that are in production or being processed, as well as finished products, but not yet shipped to storage warehouses.

Analytical accounting on the account is carried out in the context of types of products, cost items and divisions of the organization.

Account 20: accounting entries

Let's look at typical accounting entries for recording operations related to core activities.

Operation	Account debit	Account credit
Inventories were transferred to our own production	20	10
Salaries and insurance contributions of personnel directly involved in the main activities are included in the OP	20	70 69
Services of third-party companies are included in the costs of OP	20	60
Write-off of management expenses reflected	20	26
General production costs are written off to OP	20	25
Returns for reworking of finished products that were found to be defective are reflected.	20	43
Manufacturing defects identified prior to sale are sent for processing	20	28
Amounts of taxes and fees are allocated to production needs	20	68
Deficiencies and losses are reflected within the norms in the production process, without persons at fault	20	94
Downtime and claims against contractors	20	76/2
Semi-finished products are sent to the production process	20	21
The costs of auxiliary production are reflected in the OP	20	23
The goods were written off for the company's production needs	20	41
Reflects the report issued to the employee for production needs	20	71
The employee was compensated for costs associated with the production process (compensation for fuel and lubricants for the use of a personal car, for example)	20	73
Work in progress was accepted as part of targeted financing	20	86
Work in progress is reflected as a contribution to the authorized capital of the organization	20	80
Excess work in progress is taken into account	20	91/1
The share of deferred expenses was attributed to the OP	20	96

Account characteristics/description:

Subaccount 20.01 “Main production” takes into account the costs of production, the products (works, services) of which were the purpose of creating this organization. The debit of subaccount 20.01 “Main production” reflects direct costs associated directly with the production of products, performance of work, provision of services, as well as expenses of auxiliary production, indirect costs associated with the management and maintenance of the main production, and losses from defects. The credit of subaccount 20.01 “Main production” reflects the amounts of the actual cost of products completed by production, work performed and services performed. These amounts can be written off from subaccount 20.01 “Main production” to the debit of accounts 43 “Output of finished products”, 40 “Output of products (works, etc.

Analytical accounting for the account is carried out by production divisions (sub-account “Divisions”), types of products (works, ) and types of production costs (sub-account “Cost Items”). Each type of manufactured product (work, service) is an element of the “Nomenclature Groups” directory. Each type of cost is an element of the “Cost Items” directory. Each production division is an element of the “Divisions” directory.

Description of the parent account: Description of account 20 “Main production”