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

3. Accrual Accounting Concepts

Adjusting Entries: Supplies

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Supplies

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Multiple Choice

The materials price variance is generally calculated at the time materials are purchased because:

the actual purchase price is known at that time.

the quantity of materials used in production is always equal to the quantity purchased.

it is required by generally accepted accounting principles (GAAP) to record variances immediately.

supplies are always consumed immediately upon purchase.

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Verified step by step guidance

Understand the concept of materials price variance: It measures the difference between the actual cost of materials purchased and the standard cost of those materials, multiplied by the quantity purchased.

Recognize that the actual purchase price is known at the time of purchase, which allows for the calculation of the variance immediately.

Clarify that the quantity of materials used in production may not always equal the quantity purchased, as materials can be stored for future use.

Note that generally accepted accounting principles (GAAP) do not mandate the immediate recording of variances; this is a managerial accounting practice rather than a financial accounting requirement.

Understand that supplies are not always consumed immediately upon purchase, as businesses often maintain inventory for future use, making this option incorrect.