9706 · 3.1.4
Manufacturing Businesses
Welcome! This lesson dives into the specific accounting required for businesses that manufacture their own products. Unlike a simple retailer who buys and sells goods, a manufacturer has a production process. We need a special account, the Manufacturing Account, to track the costs of this process before we can prepare the final financial statements.
Need to know
What you need to know
- Understand and prepare a manufacturing account, including the calculation of factory profit.
- Prepare a statement of profit or loss and a statement of financial position for a manufacturing business.
- Account for manufacturing profit and the elimination of unrealised profit from unsold inventory.
- Explain the reasons for incorporating a factory profit.