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JAMB Principles of Accounts 1997 Question 32

Question 32

Manufacturing Accounts

The difference between a trading account and a manufacturing account is that while the manufacturing account

  1. A.has no particular period, the trading account has
  2. B.does not consider the cost of goods involved, the trading account does
  3. C.is concerned with the cost of production, the trading account is not
  4. D.is not concerned with the stock of raw materials, the trading account is.
Show the answer and explanation

Answer: C (is concerned with the cost of production, the trading account is not)

Explanation

The manufacturing account works out the cost of producing goods; the trading account works out gross profit on sales.