For Better Control of Direct Material Prices, When Should Direct

question 63

Multiple Choice

For better control of direct material prices, when should direct material price variance be recognized?

• A)when material is purchased
• B)when material is issued from the storeroom
• C)when material is put into production
• D)when production is completed

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Definitions:

Expense Accounts

Accounts used to record business expenses, which reduce net income in the profit and loss statement.

Income Summary

An account used in the closing process that summarizes revenues and expenses to determine the net income or loss for a period.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account, recorded on the left-hand side.

Utilities Expense

Utilities Expense refers to the cost incurred from the consumption of utilities services like electricity, water, and gas in the course of business operations.