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

Which of the following best describes the journal entry to record the application of factory overhead to production?

Debit Factory Overhead; Credit Raw Materials

Debit Factory Overhead; Credit Work in Process

Debit Cost of Goods Sold; Credit Factory Overhead

Debit Work in Process; Credit Factory Overhead

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Verified step by step guidance

Understand the concept of factory overhead application: Factory overhead refers to indirect costs incurred during production, such as utilities, depreciation, and maintenance. These costs are applied to production to allocate them to the products being manufactured.

Recognize the accounts involved: 'Work in Process' represents the costs of products that are partially completed, while 'Factory Overhead' is the account used to track indirect production costs before they are allocated.

Determine the journal entry structure: When factory overhead is applied to production, the 'Work in Process' account is debited to increase the cost of partially completed goods, and the 'Factory Overhead' account is credited to reduce the balance of overhead costs that have been allocated.

Analyze the options provided: The correct journal entry is 'Debit Work in Process; Credit Factory Overhead,' as this reflects the allocation of overhead costs to production.

Review the reasoning: This journal entry ensures that indirect costs are properly assigned to the products being manufactured, aligning with the principles of cost accounting and accurate financial reporting.