Understanding Final Accounts for Manufacturing Companies: Structure and Application
Learn how to identify the structure of final accounts, calculate costs, and prepare financial statements for manufacturing companies. This guide covers the Manufacturing Account, Trading & P&L Account, and Balance Sheet, along with example questions and workings. Enhance your knowledge of cost classification and adjustments to excel in accounting.
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Presentation Transcript
Final Accounts for Manufacturing Companies 6th Year Accounting Final Accounts Manufacturing SDuffy Date: February 2025
Learning Intentions - Identify and explain the structure of the three main sections of Final Accounts. - Understand the workings and calculations required before answering a Final Accounts question. - Apply knowledge of cost classification and adjustments in financial statements.
Success Criteria - Outline the structure and purpose of Manufacturing Account, Trading & P&L Account, and Balance Sheet. - Correctly categorize costs as Direct Materials, Direct Labour, Factory Overheads. - Complete the necessary workings before attempting the full question in Lesson 2.
Breakdown of Final Accounts - Manufacturing Account: Determines cost of goods manufactured. - Trading & P&L Account: Calculates gross and net profit. - Balance Sheet: Shows the financial position of the company.
Example Question - Manufacturing Account Given data: - Raw Materials Opening Stock: XX,XXX - Purchases: XX,XXX - Closing Stock: XX,XXX - Direct Labour: XX,XXX - Factory Overheads: XX,XXX Required: Prepare the Manufacturing Account.
Workings - Cost of Raw Materials Used Cost of Raw Materials Used = Opening Stock + Purchases - Closing Stock = XX,XXX + XX,XXX - XX,XXX = XX,XXX
Workings - Total Factory Cost Total Factory Cost = Cost of Raw Materials Used + Direct Labour + Factory Overheads = XX,XXX + XX,XXX + XX,XXX = XX,XXX
Example Question - Trading & P&L Account Given data: - Sales Revenue: XX,XXX - Cost of Goods Sold: XX,XXX - Operating Expenses: XX,XXX Required: Prepare the Trading & Profit and Loss Account.
Workings - Gross Profit Gross Profit = Sales Revenue - Cost of Goods Sold = XX,XXX - XX,XXX = XX,XXX
Workings - Net Profit Net Profit = Gross Profit - Operating Expenses = XX,XXX - XX,XXX = XX,XXX
Example Question - Balance Sheet Given data: - Fixed Assets: XX,XXX - Current Assets: XX,XXX - Liabilities: XX,XXX Required: Prepare the Balance Sheet.
Workings - Net Assets Net Assets = Fixed Assets + Current Assets - Liabilities = XX,XXX + XX,XXX - XX,XXX = XX,XXX
Conclusion - Quick Quiz: Recap key components and purpose of each section. - Class Discussion: Address any student queries before moving to solving Q1B in Lesson 2.
