Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Kempes Limited is a company that produces one product. Completed goods are moved out of the factory at production cost plus 15%. Any goods not sold are kept in the warehouse.
(a)[9]

Prepare the manufacturing account covering the year ended 30 September 2015.

(b)[6]

Prepare the income statement for the year ending 30 September 2015.

(c)[3]

Explain why a business may set up a provision for unrealised profit.

(d)[2]

Analyse the effect on budgeted profit for October 2015 arising from changes in the provision for unrealised profit.

(e)[5]

Advise the directors on whether the mark-up ought to be increased. Justify your answer.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme.

  • Full mark scheme, point by point
  • Step-by-step worked solution
  • Write your answer & get it marked instantly by AI