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

The journal entry to record indirect materials costs used in production includes a debit to which account?

Factory Overhead

Finished Goods Inventory

Raw Materials Inventory

Work in Process Inventory

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Verified step by step guidance

Understand the concept of indirect materials: Indirect materials are materials used in the production process that cannot be directly traced to specific products. Examples include lubricants, cleaning supplies, or small tools.

Recognize the role of Factory Overhead: Indirect materials are part of factory overhead costs, which include all indirect costs associated with manufacturing, such as indirect labor, utilities, and depreciation of factory equipment.

Determine the account to debit: When indirect materials are used in production, the cost is recorded as a debit to the Factory Overhead account. This reflects the accumulation of indirect costs that will later be allocated to products.

Consider the accounts not debited: Finished Goods Inventory, Raw Materials Inventory, and Work in Process Inventory are not debited for indirect materials. These accounts are used for direct costs or for tracking inventory at different stages of production.

Prepare the journal entry: The journal entry to record indirect materials used in production would include a debit to Factory Overhead and a credit to Raw Materials Inventory, as the materials are removed from inventory and classified as overhead costs.