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 materials are used in production, which accounts are affected by the journal entry?

Debit Work in Process Inventory; Credit Raw Materials Inventory

Debit Manufacturing Overhead; Credit Work in Process Inventory

Debit Finished Goods Inventory; Credit Raw Materials Inventory

Debit Raw Materials Inventory; Credit Work in Process Inventory

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Verified step by step guidance

Understand the context: The question is about the journal entry when materials are used in production. This involves tracking the movement of inventory accounts in a manufacturing setting.

Identify the accounts involved: When materials are used in production, the Raw Materials Inventory account decreases (credit), and the Work in Process Inventory account increases (debit). This reflects the transfer of raw materials into production.

Clarify the journal entry: The correct journal entry would be 'Debit Work in Process Inventory' to show the increase in production materials and 'Credit Raw Materials Inventory' to show the decrease in raw materials.

Eliminate incorrect options: Review the other options provided and ensure they do not match the correct accounting treatment. For example, 'Debit Manufacturing Overhead; Credit Work in Process Inventory' is incorrect because manufacturing overhead is not directly affected by raw materials usage.

Confirm the correct answer: Based on the analysis, the correct journal entry is 'Debit Work in Process Inventory; Credit Raw Materials Inventory,' as this accurately reflects the movement of materials into production.