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

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

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Multiple Choice

When manufacturing overhead is applied to production, it is added to which of the following accounts?

Cost of Goods Sold

Work in Process Inventory

Raw Materials Inventory

Finished Goods Inventory

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Verified step by step guidance

Understand the concept of manufacturing overhead: Manufacturing overhead includes all indirect costs associated with production, such as factory utilities, depreciation on equipment, and salaries of supervisors. These costs are applied to production to allocate them to the products being manufactured.

Recognize the role of Work in Process Inventory: Work in Process Inventory represents the costs of products that are partially completed. It includes direct materials, direct labor, and applied manufacturing overhead.

Identify the correct account: When manufacturing overhead is applied, it is added to the Work in Process Inventory account because this account tracks the costs incurred during the production process before the goods are completed.

Distinguish other accounts: Raw Materials Inventory tracks the cost of materials before they are used in production, Finished Goods Inventory tracks the cost of completed products, and Cost of Goods Sold represents the cost of products sold. None of these accounts are directly affected when manufacturing overhead is applied.

Summarize the process: Manufacturing overhead is applied to production by debiting the Work in Process Inventory account and crediting the Manufacturing Overhead account, ensuring that indirect costs are properly allocated to the products being manufactured.