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

When manufacturing overhead is applied to production, which account is credited?

Finished Goods Inventory

Manufacturing Overhead

Work in Process Inventory

Raw Materials Inventory

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Verified step by step guidance

Understand the concept of manufacturing overhead: Manufacturing overhead includes all indirect costs related to 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 accounts involved: The key accounts in this scenario are Manufacturing Overhead, Work in Process Inventory, Finished Goods Inventory, and Raw Materials Inventory. Each serves a specific purpose in tracking costs during production.

Determine the flow of costs: Manufacturing overhead is applied to production by transferring the indirect costs from the Manufacturing Overhead account to the Work in Process Inventory account. This reflects the allocation of overhead costs to products currently being manufactured.

Identify the credit and debit entries: When manufacturing overhead is applied, the Manufacturing Overhead account is credited to reduce its balance, and the Work in Process Inventory account is debited to increase its balance, showing the allocation of costs to production.

Understand why other accounts are not credited: Finished Goods Inventory is used for completed products, Raw Materials Inventory tracks direct materials, and neither is involved in the application of manufacturing overhead. Therefore, the correct account to credit is Manufacturing Overhead.