Difference between trading and manufacturing account
Answers
Answered by
20
Hey friend here is your answer
A Trading Account is a Final and financial statement drawn by a firm at the end of their accounting period showing the relationship that existed between their Sales volume and Purchases and the Gross profit or loss arrived. When Net Sales exceeds the Cost of Sales then there is Gross Profit. However, if the Cost of Sales exceeds the Net Sale(Sales less Return Inwards) then there is Gross loss.
A Manufacturing Account is part of the Final accounts drawn by a manufacturing entity before drawing the Trading Account. Since the firm is engaged in the manufacturing or converting of raw materials to finished goods,they express the monetary value of Prime Cost(Direct Materials + Direct Labour + Direct Expense) and Overheads( Sum of all Indirect cost) to determine the cost of Production. The manufacturing account is used to generate the Total Cost which is the sum of the cost of production, Selling and distribution overhead, production overhead and Administration overheads
Hope it helps you............!!
A Trading Account is a Final and financial statement drawn by a firm at the end of their accounting period showing the relationship that existed between their Sales volume and Purchases and the Gross profit or loss arrived. When Net Sales exceeds the Cost of Sales then there is Gross Profit. However, if the Cost of Sales exceeds the Net Sale(Sales less Return Inwards) then there is Gross loss.
A Manufacturing Account is part of the Final accounts drawn by a manufacturing entity before drawing the Trading Account. Since the firm is engaged in the manufacturing or converting of raw materials to finished goods,they express the monetary value of Prime Cost(Direct Materials + Direct Labour + Direct Expense) and Overheads( Sum of all Indirect cost) to determine the cost of Production. The manufacturing account is used to generate the Total Cost which is the sum of the cost of production, Selling and distribution overhead, production overhead and Administration overheads
Hope it helps you............!!
Answered by
2
Answer:
hiii....
Explanation:
trading :-
a trading account is prepared to find out the results of trading activities.
cost of good sold is deducted from the value of sales to find out the trading results i.e gross profit.
manufacturing account :-
it is assume that the trading account is prepared when the traders undertakes only purchasing and selling i. e no manufacturing I'd undertaken .
a manufacturing account is prepared to find out cost of production .that is the manufacturing account is relevant when there is manufacturing activities.
.......thank you.......
Similar questions