A manufacturer's stock exists in more than one state at once — raw material, work in progress, finished product — and each needs to be tracked as what it actually is. Here's how Nkwazi Foods & Beverages handles it.
A trading business holds one kind of stock: goods bought to be sold on. A manufacturer holds several kinds at once, at different stages of the same production line. Nkwazi Foods & Beverages Ltd, one of our eighteen fictional reference companies, is built to show exactly that.
Where the complexity actually is
Fourteen stock lines carry Nkwazi's inventory across three genuinely different states — raw materials in stores, partly-made product still in work in progress, and finished goods ready to sell — each resolving onto the right part of the warehouse rather than being lumped into one undifferentiated stock figure. A plant register carries asset finance on its newest line, dollar-denominated packaging and spares creditors sit alongside the ordinary Kwacha ones, and trade rebates payable and a gratuity provision round out a set of books shaped by an industrial process, not just a sales ledger.
Fully onboarded, and transacting
Nkwazi went through the same review and sign-off workflow described in our opening balances post, and has carried on since: a real quotation, order, invoice and payment on the selling side, a real purchase order, supplier bill and payment on the buying side, and — because its packaging and spares suppliers are dollar-denominated — a month-end exchange rate revaluation on that creditor balance.
Get in touch if manufacturing accounting like this is closer to your own business than a standard trading company.
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