Look at Figure 7.1 and follow the flow of transactions down the diagram. Then use the diagram to explain how costs are collected in the profit and loss account.

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Figure 7.1 Diagrammatic representation of the flow of costs and revenue in a job-costing system Inventory (a) (d) (c) (h) Work-in-progress (d) Trade creditors (a) (0) Wages (0) (b) (0) Finished goods Trade debtors () (k) Production overhead (c) (9) Profit and loss account 0.0 (p) (n) (p) Bank Sales +(0) (b) (c) (m) Administration and selling (m) (n) Cost of goods sold (k) -(0)