A manufacturing account is an internal financial statement used by businesses that produce products or goods to track their production costs, materials used, and inventory levels. It is one of the three accounts in the accounting system, the other two being a trading account and balance sheets. The main purpose of preparing the manufacturing account is to ascertain the cost of goods manufactured during the financial year and to determine the amount of any profit or loss occurred during the manufacturing process. The manufacturing account provides information on all the expenses and costs incurred in the preparation of the goods to be sold, including the expenses that are met in preparing the goods but not the finished goods. The manufacturing account includes direct costs, such as the cost of raw materials, and indirect costs, such as factory overheads. The following steps are involved in the preparation of the manufacturing account:

• Opening stock of raw materials will be added to the purchases, and the stock of raw materials shall be deducted to get the cost of materials used during the period.
• All the indirect costs will be added.
• To get the production cost of all goods completed, opening stock of Work in progress shall be added, and thereafter closing stock of work in progress will be deducted.

Manufacturing accounts can help businesses manage their cash flow and budget for future production. Manufacturing businesses usually transfer finished goods from the manufacturing account to the income statement at market value (wholesale price) to evaluate how efficiently the factory is operating. The primary type of accounting used in manufacturing is known as cost accounting, which tracks production costs in a way that managers can use to inform business decisions.