Backflush accounting is a product costing approach, used in a Just-In-Time (JIT) operating environment, in which costing is delayed until goods are finished. Standard costs are then flushed backward through the system to assign costs to products. The result is that detailed tracking of costs is eliminated. Journal entries to inventory accounts may be delayed until the time of product completion or even the time of sale, and standard costs are used to assign costs to units when journal entries are made, that is, to flush costs backward to the points at which inventories remain.

It can be argued that backflush accounting simplifies costing since it ignores both labour variances and work-in-progress. Backflush accounting is employed where the overall cycle time is relatively short and inventory levels are low.

BackFlush accounting is inappropriate when production process is long and this has been attributed as a major flaw in the design of the concept.

Meaning of Back flushing

Back flushing is nothing but automatic goods issue. System will automatically posts the goods issue when you confirm the operations. You have no need to make manual issue. It will reduce the effort.

Back flushing is automatic accounting of material consumed for production, at the time of confirmation of the production, e.g. when a 4 wheeler automobile is rolled out from assembly line, 4 wheels and tyres are deemed to be consumed and issued to production order automatically by way of back flushing by the system. The assembly line picks the material from Stores/Assembly line and use. No physical issue and manual posting of goods issue by Stores is made.
Back flush is used for materials which are a must in the product and having fixed relationship with the product.