Accounting·Other accounting statements · NSSCO 1.2
Manufacturing Income Statement & SOFP
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A manufacturing business makes its own goods before selling them, so its Income Statement has THREE sections instead of two: Manufacturing, Trading, and Profit and loss. We'll see how the production cost of finished goods steps into the Trading section in place of purchases, build a full vertical Income Statement with real N$ figures, and then prepare a Statement of Financial Position with its three special inventories — raw materials, work in progress and finished goods.
What you'll learn in this lesson
By the end you should be able to (NSSCO Accounting 1.2):
- Explain the relationship between a Manufacturing section and a Trading section in an Income Statement of a manufacturing business
- Prepare an Income Statement of a manufacturing business in vertical format with sections for Manufacturing, Trading, and Profit and loss
- Prepare Statements of Financial Position of manufacturing businesses (vertical format)
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