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 used in production is to:

Debit Factory Overhead and credit Raw Materials Inventory

Debit Finished Goods Inventory and credit Raw Materials Inventory

Debit Work in Process Inventory and credit Raw Materials Inventory

Debit Raw Materials Inventory and credit Factory Overhead

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Verified step by step guidance

Understand the concept of indirect materials: Indirect materials are materials used in production that cannot be directly traced to specific products. These costs are typically included in factory overhead.

Recognize the accounts involved: Factory Overhead is an account used to accumulate indirect costs related to production, while Raw Materials Inventory represents the cost of materials available for use in production.

Determine the impact of using indirect materials: When indirect materials are used, their cost is transferred from Raw Materials Inventory to Factory Overhead, reflecting their consumption in the production process.

Identify the correct journal entry: To record the use of indirect materials, you need to debit Factory Overhead (to increase the account) and credit Raw Materials Inventory (to decrease the account).

Ensure proper classification: This journal entry ensures that indirect material costs are correctly classified as part of overhead costs, which will later be allocated to products during the production process.