Accounting 9706 · AS & A Level · Preparation of financial statements
Preparation of financial statements — practice question
L plc is a manufacturing enterprise. For the year ended 31 December 2017, the overall prime cost was $350000. A selection of balances and further details is given for use in preparing manufacturing accounts.
(a(i))[2]
Explain what is meant by prime cost.
(a(ii))[2]
Explain what is meant by work in progress.
(b)[13]
Using the information given, prepare the manufacturing account for the year ended 31 December 2018.
(c)[8]
Discuss whether inventory ought to have been recognised at this amount. Support your view by referring to relevant accounting concepts and suitable calculations.
Worked solution & mark scheme
This 25-mark question has a full step-by-step worked solution and mark scheme.