Direct Materials and Direct Manufacturing Labor Become a Part of Work-In-Process

question 98

True/False

Direct materials and direct manufacturing labor become a part of work-in-process inventory on the balance sheet because the direct manufacturing labor transforms the direct materials to another asset, work-in-process inventory.

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Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, showing the balance between what it owns and owes.

Prepared

The state of having something ready for use or consideration, often used in the context of financial documents or plans.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used to prepare financial statements.

Liabilities

The rights of creditors that represent debts of the business.