Under a job order system of cost accounting,Cost of Goods Sold is debited and Finished Goods is credited for a:
A)Transfer of materials to the factory.
B)Shipment of completed goods to the customer.
C)Transfer of completed production to the finished goods storeroom.
D)Purchase of goods on account.

Question

Quizplus · Accepted Answer

Under job order system, Cost of Goods Sold is recorded only when the finished products are sold and shipped out to the customer. Therefore, when completed goods are shipped out, Cost of Goods Sold account is debited and Finished Goods account is credited. A is incorrect because transfer of materials would result in a debit to Raw Materials inventory and credit to Work-in-Progress (not Finished Goods). C is incorrect because transfer of completed products to the finished goods storeroom would also result in a debit to Finished Goods inventory and credit to Work-in-Progress (not Cost of Goods Sold). D is incorrect because purchase of goods on account would increase the Raw Materials inventory (not Cost of Goods Sold or Finished Goods).

Under a Job Order System of Cost Accounting,Cost of Goods