JAMB Accounts Principles of Accounts 2013 Paper

Concept:Closing work-in-progress is used in a manufacturing account to adjust the total production cost so that only finished goods are treated as completed during the year.Explanation:The manufacturing account begins with the total manufacturing costs for the period.Add the opening work-in-progress to this amount.Then deduct the closing work-in-progress at the end of the year.The result is the cost of goods completed during the year.Thus, the working formula is:$$\text{Opening WIP} + \text{Manufacturing costs} - \text{Closing WIP} = \text{Cost of goods completed}$$This means closing work-in-progress is deducted in arriving at the cost of goods completed.It is not added to cost of goods completed, and it is not reported in the profit and loss account or prime cost section.Answer:A. deducted from the cost of goods completed during this year.