The principal forms of revenue accounts

The revenue accounts, whose purpose is eventually to show the profit or loss for a period, and the way in which the profit or loss is disposed of, are normally subdivided where necessary as follows:
Manufacturing account
Trading account
Profit and loss account
Appropriation account

Variants of these conventional headings are used for particular purposes and for particular types of organizations. Thus, Assurance companies prepare revenue accounts for each main class of business; non-profit-making organization prepare income and expenditure accounts; operating statements are prepared, not necessarily for publication, by many industrial organization to cover various processes or subvidisions of the main work of the concern.

The manufacturing account
The manufacturing accounts follows:
1. The objects of the accounts
As the terms implies, a manufacturing account is prepared by a producing organization and the objects of the account is to show :
a. The total cost of production during the period
b. The manufacturing cost of the finished output which is put into finished good store.

2. The application of the manufacturing account for costing purpose
If an industrial unit produces only one uniform product,, then obviously the average factory or direct cost of producing that product can be ascertained by the simple process of dividing the total factory cost as shown in the manufacturing account by the number of articles produced during the period.

3. The form of the account
(to be continue….)