In a manufacturing environment, costs of materials initially flow
A) into the Work in Process Inventory account.
B) into the Materials Inventory account.
C) directly to Cost of Goods Sold.
D) into the Finished Goods Inventory account.

Question

Quizplus · Accepted Answer

The costs of materials are initially recorded in the Materials Inventory account when they are purchased. This account is then used to track the cost of materials used in production and transferred to the Work in Process Inventory account. When finished goods are completed and sold, the cost of materials is transferred to the Cost of Goods Sold account. Therefore, options A, C, and D are not correct.

In a Manufacturing Environment, Costs of Materials Initially Flow