Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Any purchased materials that will go into the finished product are first recorded in the:

Work in Process Inventory account

Finished Goods Inventory account

Raw Materials Inventory account

Cost of Goods Sold account

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Verified step by step guidance

Understand the concept of inventory accounts: In manufacturing, inventory is categorized into three main accounts—Raw Materials Inventory, Work in Process Inventory, and Finished Goods Inventory. Each account represents a different stage in the production process.

Recognize the role of Raw Materials Inventory: This account is used to record the cost of materials purchased that will be used in the production process but have not yet been put into production.

Differentiate between Work in Process Inventory and Finished Goods Inventory: Work in Process Inventory represents goods that are partially completed, while Finished Goods Inventory represents completed products ready for sale.

Understand why purchased materials are recorded in Raw Materials Inventory: When materials are purchased, they are not yet part of the production process, so they are initially recorded in the Raw Materials Inventory account.

Relate this to Cost of Goods Sold: The Cost of Goods Sold account is used to record the cost of products that have been sold, not the cost of materials purchased. Therefore, purchased materials are not recorded here.