Final answer:
Option 1: True, The provided journal entry is appropriate for recording $700 in labour costs to the Work-in-Process Inventory account while recognizing the same amount as a liability in the Wages Payable account.
Step-by-step explanation:
The student is asking whether the accounting entry "Debit Work-in-Process Inventory by $700 and credit Wages Payable by $700" is correct. This journal entry is used in cost accounting, a branch of accounting dealing with the recording, classification, allocation, and reporting of costs associated with a product. In this specific instance, if labour costs amounting to $700 are being added to the work-in-process inventory, and these costs have not yet been paid but are due to workers, then the given entry is true. Debiting the Work-in-Process account increases the costs associated with production, and crediting the Wages Payable account indicates a liability or an obligation to pay the workers for their labour in the future. Understanding this entry is essential in comprehending how labour costs are capitalized into the cost of creating finished goods and how they represent an obligation to pay.