By S. Hall and N. Skene Smith (Auth.)
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Extra resources for Accounting Principles and Practice
The Loss is debited to Capital Account after appearing on the credit side of the Profit & Loss Account. The Balance Sheet By transferring the balances of the Nominal Accounts to the Trading and Profit & Loss Account we derive a figure of Net Profit. The Trading and Profit & Loss Account gives us, in summary form, the history of the trading for the period con cerned. This leads naturally to a consideration of the next financial statement. The Balance Sheet is the statement of the position of the business at the end of the trading period.
Plant & Machinery 1962 93,074 Balance at 1st Jan. , 1962 6,600 Less Depreciation 1,320 5,280 Stock: Liabilities: Finished Goods 8,190 Sundry Creditors 16,216 Work in Progress 5,420 Raw Materials 1,980 15,590 18,400 Sundry Debtors Less Provision for Bad Debts 920 17,480 Cash at Bank 7,130 Cash in Hand 71 7,201 £121,241 "£121,241 52 ACCOUNTING PRINCIPLES AND PRACTICE Sometimes the Manufacturing Account is credited (and the Trading Account debited), not with the Factory Cost of Goods Produced, but with an assumed market value of the production.
9 Jan. 1 To Balance b/f Dec. 31 Dec. 31 P. & L. A / c Gain on Sale 62 By Cash—Sale Depreciation Balance c/d £4,840 1963 Jan. 1 To Balance b/d Cr. £ 220 462 4,158 £4,840 4,158 Manufacturing Accounts A Trading Account of a manufacturing concern as given above is still unsatisfactory. It does not compare the Sales with the Cost of Goods Sold. For this comparison considerably more information must be forthcoming. In particular, the Stock figures must be analysed into three parts: (a) Raw Materials, (b) Partly Finished Goods or Work in Progress and (c) Finished Goods.