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Chapter 15

1.3 Statement of financial position

A manufacturing business will have financial statements which show no major or
fundamental differences from the financial statements you have already studied. Its
statement of financial position will be very similar, although it is worth noting that the
asset of inventory in a manufacturing business may be made up of four separate
elements:

 bought in goods – those bought in as finished goods and to be sold to
customers

 raw materials – purchased from suppliers and not yet used in the
manufacturing and production process

 work in progress – i.e. partly completed goods

 finished goods – those already manufactured and ready for sale to customers

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