Under a Backflush Costing System, the Journal Entry to Purchase

question 13

Multiple Choice

Under a backflush costing system, the journal entry to purchase raw materials on account is:

• A) debit work in process and credit accounts payable.
• B) debit raw materials and credit cash.
• C) debit raw and in-process inventory and credit accounts payable.
• D) debit cost of goods sold and credit accounts payable.

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Definitions:

Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services over time.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising annually.

CPI

Tracking the average evolution in pricing for a collection of goods and services purchased by people in urban areas, the Consumer Price Index serves as an indicator of these changes over time.

Consumer Price Index

The Consumer Price Index measures the average change over time in the prices paid by consumers for a basket of goods and services.