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 transactions would result in a debit to the Manufacturing Overhead account?

Direct labor costs incurred

Indirect materials used in production

Overapplied overhead closed to Cost of Goods Sold

Applied overhead to Work in Process

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Verified step by step guidance

Understand the concept of the Manufacturing Overhead account: This account is used to accumulate all indirect costs related to production, such as indirect materials, indirect labor, and other factory overhead expenses.

Review the nature of each transaction: Direct labor costs are not debited to Manufacturing Overhead because they are direct costs and are debited to Work in Process. Applied overhead to Work in Process is a credit to Manufacturing Overhead, not a debit. Overapplied overhead closed to Cost of Goods Sold involves adjusting the Cost of Goods Sold account, not debiting Manufacturing Overhead.

Focus on the transaction 'Indirect materials used in production': Indirect materials are part of manufacturing overhead. When these materials are used, the Manufacturing Overhead account is debited to reflect the increase in overhead costs.

Understand the journal entry for indirect materials: The journal entry would typically debit Manufacturing Overhead and credit Raw Materials Inventory to account for the usage of indirect materials.

Conclude that the correct transaction resulting in a debit to Manufacturing Overhead is 'Indirect materials used in production,' as it aligns with the purpose of the account to accumulate indirect production costs.