When Raw Materials Are Purchased on Account for Use in a Process

question 42

Multiple Choice

When raw materials are purchased on account for use in a process costing system,the corresponding journal entry that should be recorded will include:

• A)A debit to Work in Process Inventory.
• B)A debit to Accounts Payable.
• C)A credit to Cash.
• D)A debit to Raw Materials Inventory.
• E)A credit to Raw Materials Inventory.

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Definitions:

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as outlined in its articles of incorporation.

Noncumulative

Pertains to certain preferential shares or rights that do not have the feature of accumulating unpaid dividends or benefits, contrasting with cumulative counterparts.

Preferred Stock

A type of stock that provides holders with certain privileges over common stockholders, typically with fixed dividends and priority in asset distribution upon liquidation.

Par Value

The face value of a bond or a stock's stated value per share, which may bear no relation to its market value.