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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Manufacturing Income Statement & SOFP · NSSCO Accounting · namstudy