If Scrap Is Reused as Direct Material Rather Than Sold

question 146

Multiple Choice

If scrap is reused as direct material rather than sold as scrap ________.

• A) Accounts Receivable is debited at its estimated net realizable value and then credited when the scrap is reused
• B) Materials Control is debited at its estimated net realizable value and then credited when the scrap is reused
• C) Manufacturing Overhead Control is debited at its estimated net realizable value and then credited when the scrap is reused
• D) Work-in-Process Control is debited at its estimated net realizable value and then credited when the scrap is reused

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Definitions:

Current Liability

A financial obligation that is due to be paid within one year.

Notes Payable

Financial obligations or loans that companies are required to pay back within a specified timeframe, often evidenced by promissory notes.

Wage and Tax Statement

A document, typically a W-2 form in the U.S., that reports an employee's annual wages and the amount of taxes withheld from their paycheck.

Current Ratio

A financial metric evaluating a firm's capacity to settle debts due within a year by dividing its current assets by its current liabilities.