A manufacturing business would hold the following stocks at the beginning and end of each financial year: raw materials, finished goods, and work-in-progress. An overview of how to account for these stocks is given below.

Raw Materials

Accounted for when calculating the cost of raw materials used in the manufacturing statement.

Finished Goods

These goods are ready for sale. They are accounted for in the trading account when calculating the cost of goods sold.

Work-in-Progress

These are goods that have been partially processed. At the time of annual stocktaking, they are neither in the form of raw materials nor the finished product.

Work-in-progress is also known as work-in-process or partly-finished goods. The accounting treatment of this type of stock is explained in our article on work-in-progress.

Frequently Asked Questions

What is a manufacturing business?

A business which manufactures goods.

How are raw materials, finished goods and work-in-progress accounted for in the trading account?

Raw materials - when calculating the cost of raw materials used in the manufacturing statement, Finished goods - these are ready for sale. They are accounted for in the Trading Account when calculating the cost of goods sold, Work-in-progress is also known as work-in-process or partly finished goods. The accounting treatment of this type of stock is explained in our article on work in process (WIP).

What does manufacturing concern mean?

A firm that makes products by creating or modifying basic components rather than purchasing them from outside suppliers.

What is a manufacturing business?

A business which manufactures goods and would hold the following stocks at the beginning and end of each financial year: raw materials, finished goods and work-in progress.

Is manufacturing concern a stock transaction?

No, it is not a stock transaction. It refers to the business of manufacturing goods and holding stocks such as raw materials, finished goods and work-in progress. This accounting terminology is the equivalent of factory account.

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