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WAEC Financial Accounting 2021 Question 5

Question 5

Manufacturing Accounts

The difference between the market value of goods produced and the cost of production is

  1. A.net profit on goods sold.
  2. B.gross profit on manufacturing.
  3. C.closing stock of work-in-progress.
  4. D.prime cost of manufacturing.
Show the answer and explanation

Answer: B (gross profit on manufacturing.)

Explanation

Transferring goods at market value above their cost gives a manufacturing (gross) profit.