Question

In making journal entries to assign raw materials costs, a company using process costing

A. debits Finished Goods Inventory
B. often debits two or more work-in-process accounts
C. generally credit two or more work-in-process accounts
D. credits Finished Goods inventory

Answer 1

In process costing, when assigning raw materials costs, a company often debits two or more work-in-process accounts, corresponding to each production stage.

Step-by-step explanation:

When making journal entries to assign raw materials costs in a company using process costing, the correct action is often debiting two or more work-in-process (WIP) accounts. Each WIP account typically corresponds to a different stage in the manufacturing process. The raw materials cost is moved from the Raw Materials Inventory account to the WIP accounts as the materials are used. The journal entry would usually look like this:

• Debit: Work-in-Process Inventory (for each production department)
• Credit: Raw Materials Inventory

Finished Goods Inventory is debited when the goods are completed and transferred out of WIP, not when raw materials costs are assigned. Therefore, the correct answer is B. Often debits two or more work-in-process accounts.