Final answer:
The Materials Control account is increased when both direct materials and indirect materials are purchased, indicated by both options A and B being correct. Requisitioning materials for production transfers them out of the Materials Control account rather than increasing it.
Step-by-step explanation:
The Materials Control account is a ledger account that tracks the cost of materials that are purchased and used in production within a company. It is generally used in manufacturing and production environments as part of the inventory accounting system.
When the company purchases direct materials, which are materials that become an integral part of the finished product, or when it purchased indirect materials, which are materials used to support the production process but not directly included in the final product, the Materials Control account is increased. This increase reflects the additional assets the company now holds in the form of materials. This means that the correct answers are both A) direct materials are purchased and B) indirect materials are purchased, making D) Both A and B correct.
When materials are requisitioned for production, it does not result in an increase in the Materials Control account. Instead, the materials are transferred out of this account into another account, such as Work in Process or Manufacturing Overhead, depending on whether they are direct or indirect materials.