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

question 49

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 Goods 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.

---

Definitions:

Impairment Losses

Financial losses recognized when an asset's carrying value exceeds its recoverable amount.

GAAP

Generally Accepted Accounting Principles (GAAP) are a framework of accounting standards, procedures, and rules used by accountants to prepare financial statements in the United States.

Long-lived Assets

Assets that provide economic benefit for more than one accounting period, typically including property, plant, and equipment.

Demolition

The process of tearing down or destroying a building or structure, usually in order to make way for new construction.