In a Periodic Inventory System, the Entry to Record the Payment

question 5

Multiple Choice

In a periodic inventory system, the entry to record the payment of shipping costs by the company buying the merchandise when the terms are FOB shipping point would include a:

• A)debit to Freight In.
• B)debit to Delivery Expense.
• C)credit to Cost of Goods Sold.
• D)credit to Freight Out.

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Definitions:

Job-Order Costing

An accounting method used to assign costs to specific batches or orders of goods, often used in manufacturing for custom products.

Total Job Cost

The cumulative costs of materials, labor, and overhead assigned to a specific job or project.

Machine-Hours

A measure of the amount of time machines are operating during the production process, often used for allocating costs.

Predetermined Overhead Rate

A calculated rate used to assign anticipated overhead costs to specific activities or products, based on a selected activity base such as labor hours or machine hours.