The Purchase of Raw Materials on Account in a Process

question 99

Multiple Choice

The purchase of raw materials on account in a process costing system is recorded with a:

• A)Debit to Purchases and credit to Cash.
• B)Debit to Purchases and a credit to Accounts Payable.
• C)Debit to Raw Materials Inventory and a credit to Accounts Payable.
• D)Debit to Accounts Payable and a credit to Raw Materials Inventory.
• E)Debit to Work in Process Inventory and a credit to Accounts Payable.

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Definitions:

Capital Gain

The profit earned from the sale of an asset that has increased in value over its purchase price.

Selling Price

The price at which a product or service is sold to customers, which can cover the cost of production and include a profit margin.

Cash Flow Estimates

Projections of the amount of money expected to flow in and out of a business over a specific period.

Financial Analyst

A person who studies the financial results of businesses and makes recommendations on their values as investments.