A LevelAccountingCambridge (CIE)Revision NotesFinancial AccountingPreparation of Financial Statements for Manufacturing BusinessesStatement of Financial Position

Statement of Financial Position (Cambridge (CIE) A Level Accounting): Revision Note

Exam code: 9706

Written by: Donna Simpson

Reviewed by: Dan Finlay

Updated on 26 March 2026

Statements of financial position for manufacturing businesses

What is the layout of the statement of financial position of a manufacturing business?

The statement of financial position of a manufacturing business is prepared in a similar way to the other types of retail businesses
The only difference is how the inventory is displayed in the current assets section
All three inventories are shown separately and the total is calculated
The balance of the provision for unrealised profit is subtracted from the closing inventory of finished goods

**Layout of the inventory entry on the statement of financial position for a manufacturing business**

Examiner Tips and Tricks

Make sure you subtract the balance of the provision for unrealised profit and not just the annual change. Remember, the change is transferred to the statement of profit or loss. This works similarly to an allowance for irrecoverable debts and a provision for depreciation.

Worked Example

Pablo owns a small carpet and rug factory, making bespoke carpets for local furniture businesses. He applies a rate of factory profit of 20%.

Inventory at 31 December 2023:

Raw materials $6 860
Work in progress $10 885
Finished goods at transfer value $14 640

Prepare an extract of the statement of financial position at 31 December 2023 showing the inventories.

Answer:

Calculate the balance of the provision for unrealised profit account

$\frac{20}{120} \times $ 14 640 = $ 2 440$

Prepare an extract of the statement of financial position to show the inventories

Pablo Statement of Financial Position (Extract) at 31 December 2023
	$	$	$
Current Assets
Closing Inventory:
Raw materials		6 860
Work in progress		10 885
Finished goods at transfer value	14 650
Less: Provision for unrealised profit	(2 440)	12 210	29 955

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