The order of cost flow through the accounts in a manufacturing firm is:

Question

Quizplus · Accepted Answer

The order of cost flow through the accounts in a manufacturing firm typically starts with the cost of raw materials that are purchased and used in production. These costs are recorded in the Raw Materials account. As the materials are used in production, they move to the Work-in-Process account. Once the production process is complete, the finished goods are transferred to the Finished Goods account. Finally, when the finished goods are sold, the cost of those goods is recorded in the Cost of Goods Sold account. Therefore, the correct order of cost flow is Raw Materials, Work-in-Process, Finished Goods, and Cost of Goods Sold, which is described in option B.

The Order of Cost Flow Through the Accounts in a Manufacturing