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Elumalai (Accountant)     12 September 2012


What is the Major difference between Manufacturing accounting and Service industry accounting?

 1 Replies

Bhaskar Unnikrishnan CPA CMA

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration)     12 September 2012

A Trading Account used in Service Indstry is a Final and financial statement drawn by a firm at the end of their accounting period showing the relationship that existed between their Sales volume and Purchases and the Gross profit or loss arrived. When Net Sales exceeds the Cost of Sales then there is Gross Profit. However, if the Cost of Sales exceeds the Net Sale(Sales less Return Inwards) then there is Gross loss.


A Manufacturing Account is part of the Final accounts drawn by a manufacturing entity before drawing the Trading Account. Since the firm is engaged in the manufacturing or converting of raw materials to finished goods,they express the monetary value of Prime Cost(Direct Materials + Direct Labour + Direct Expense) and Overheads( Sum of all Indirect cost) to determine the cost of Production.

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