 Hello, in this presentation, we will define Job Order Costing System. According to fundamental accounting principles, while the 22nd edition, the definition of Job Order Costing System is cost accounting system to determine the cost of producing each job or job lot. When considering a job order costing system, we're typically thinking of a manufacturing company, Job Order Costing System being one of two general systems used in a manufacturing company, the other being a process costing system. When considering a manufacturing company, we support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course, each course then organized in a logical reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. We mean we are talking about a company that has raw materials that is then converted to finished goods. For example, if we take a look at a trial balance, we could have multiple accounts that will be part of the total inventory accounts that will relate to the tracking of that inventory through the production process, including raw materials, working process, factory overhead, finished goods, and ultimately those finished goods then will be what is sold in terms of cost of goods sold. When we're talking about a job order costing system, we are generally going to be backing up this process by job. So for example, we can see that we're going to have raw materials, those raw materials are going to then be transferred to either work in process and or factory overhead, finally ending up in when the inventory is finished, the finished goods inventory. This information needs to be tracked and like all accounts, it will be tracked in a general ledger account for in these case, raw materials, finished goods, working process, factory overhead, the items in the general ledger in order by transaction date of transactions, and the total here being the same in the general ledger as in the trial balance. So we have the 170,000 here, raw materials inventory, raw materials inventory 170,000. Same is going to be true for finished goods inventory, working process, overhead. Problem here is that this does not track by unit in terms of jobs or groups of jobs. And therefore, as we complete jobs, as we complete jobs from say, working process to finished goods, we need to know the costs related to those particular jobs. Typically a job cost system is going to have jobs that aren't all the same. They'll be different in nature. And therefore, we need to know what costs are related to that particular job. Therefore we're going to have some type of job cost sheet. In this example, we have job 14, 15 and 16 tracking the costs per job, including materials, labor and overhead. Only open job in this example being job 16 is open. And we have the 260,000 total in that job. Because that's the only job open, that is what's backing up this number on the trial balance 260,000 as well as this number on the general ledger. The other two jobs being closed mean that they are part of the finished goods inventory and are then ready for sale at which time they will be transferred from finished goods to cost of goods sold, the expense account related to the selling of inventory.