Cost of raw materials is debited to Raw Materials Inventory when the

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Quizplus · Accepted Answer

Cost of raw materials is debited to Raw Materials Inventory when the materials are received. This is because at the point of receiving the materials, the inventory is physically updated to reflect the increase in quantity and value of the raw materials. Ordering the materials only initiates the process of procuring them, but does not involve an actual increase or decrease in inventory. Putting the materials into production involves a transfer of materials from the inventory to the production process, and bill payment only affects the cash or accounts payable account, but not the inventory account.

Cost of Raw Materials Is Debited to Raw Materials Inventory