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Topic 9: Comparison of FS between Industries

Topic 9: Comparison of FS between Industries. Merchandise vs. Service. Z Car Repair Enterprise Income Statement For the year ended xxxxx RM Revenue from services xxx Less: Operating expenses (xxx) Net Profit xxxx. Hias Enterprise Income Statement

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Topic 9: Comparison of FS between Industries

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  1. Topic 9: Comparison of FS between Industries

  2. Merchandise vs. Service

  3. Z Car Repair Enterprise Income Statement For the year ended xxxxx RM Revenue from services xxx Less:Operating expenses(xxx) Net Profit xxxx

  4. Hias Enterprise Income Statement For the year ended XXXX RM Revenue from sales xxx Less: Cost of goods sold(xxx) Gross Profit xxx Less:Operating Expenses (xxx) Net Profit xxxx

  5. Manufacturing • Produces the finished goods. • Buy raw materials & convert them into finished goods for resale. • Involved in production activities, besides the normal selling & administrative activities. • Need to determine their production cost in arriving to their cost of goods sold.

  6. Production Cost • Measures the cost of goods manufactured. Production = Direct material + Direct labor + Cost Direct Expenses+ Production overhead • Direct material - materials which the manufacturing business converts into its finished product. • Direct labor – wages paid to employees who are directly involved in the actual production.

  7. Direct expenses – expenses other than material and labor that can be directly related to a specific product. • Production overhead – costs that are not directly related to the actual production of goods.

  8. ABC Manufacturing Manufacturing Account for the year ended 31/12/20x9 RM RM Opening Inventory – raw material xxx Add: Purchases of raw material xxx Carriage Inwards xxx Less: Closing Inventory- raw material (xx) Cost of raw material used xxx Direct labor xxx Direct expenses xxx xxx Production overhead Indirect material xxx Indirect labor xxx Depreciation- machines xxxxxx Production cost transferred to income statement xxx

  9. ABC Manufacturing Income Statement for the year ended 31/12/20x9 RM RM Sales xxx Less: Cost of goods sold Opening inventory – finished goods xxx Add: Production cost* xxx Less: Closing inventory- finished goods (xx)(xxx) Gross Profit xxxx * The production cost figure in the manufacturing account is transferred to the income statement, replacing purchases in the income statement of a trading business.

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