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CH0303

The document discusses accounting entries related to direct and indirect materials used in the production process. When a company uses direct materials in production, there is a debit to Work-in-Process Inventory and a credit to Raw Materials Inventory. The use of indirect materials results in a debit to Manufacturing Overhead. Together, these entries properly record the consumption of materials in the production process.

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Mark Michael Legaspi
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147 views

CH0303

The document discusses accounting entries related to direct and indirect materials used in the production process. When a company uses direct materials in production, there is a debit to Work-in-Process Inventory and a credit to Raw Materials Inventory. The use of indirect materials results in a debit to Manufacturing Overhead. Together, these entries properly record the consumption of materials in the production process.

Uploaded by

Mark Michael Legaspi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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15. Which of the following statements about manufacturing cost flows is false?

A. Direct materials, direct labor, and manufacturing overhead are entered in the Work-in-
Process Inventory account.
B. The Finished-Goods Inventory account will contain entries that reflect the cost of goods sold
during the period.
C. The cost of units sold during the period will typically appear on the income statement.
D. When a company sells goods that cost $54,000 for $60,000, the firm will enter $6,000 in an
account entitled Profit on Sale.
E. Units are normally transferred from Work-in-Process Inventory to Finished-Goods Inventory.

Answer: D LO: 2, 5 Type: N

16. Which of the following statements about materials is false?


A. Acquisitions of materials are normally charged to the Purchases account.
B. The use of direct materials gives rise to a debit to Work-in-Process Inventory.
C. The use of indirect materials gives rise to a debit to Manufacturing Overhead.
D. The use of indirect materials gives rise to a credit to Manufacturing Supplies Inventory.
E. Direct materials are accounted for in a different manner than indirect materials.

Answer: A LO: 5 Type: A

17. Longview Corporation recently used $72,000 of direct materials and $3,000 of indirect materials
in production activities. The journal entries reflecting these transactions would include:
A. a debit to Raw-Material Inventory for $72,000.
B. a debit to Manufacturing Overhead for $3,000.
C. a credit to Manufacturing Overhead for $3,000.
D. a debit to Work-in-Process Inventory for $75,000.
E. a debit to Manufacturing Overhead for $75,000.

Answer: B LO: 5 Type: A

18. A review of a company's Work-in-Process Inventory account found a debit for materials of
$67,000. If all procedures were performed in the correct manner, this means that the firm:
A. also recorded a credit to Raw-Material Inventory.
B. also recorded a credit to Manufacturing Supplies Inventory.
C. was accounting for the usage of direct materials.
D. was accounting for the usage of indirect materials.
E. was accounting for the usage of direct materials by also crediting the Raw-Material Inventory
account.

Answer: E LO: 5 Type: N


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