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JAMB Principles of Accounts 1999 Question 24

Question 24

Manufacturing Accounts

When the factory cost of production has been ascertained, manufactured goods are transferred to trading account by

  1. A.debiting manufacturing account and crediting trading account
  2. B.crediting sales account and debiting trading account
  3. C.debiting sales account and crediting trading account
  4. D.crediting manufacturing account and debiting trading account.
Show the answer and explanation

Answer: D (crediting manufacturing account and debiting trading account.)

Explanation

Finished goods leave the manufacturing account (credit) and go into the trading account (debit).