In an internal transfer,the selling division records the event by crediting
A)Accounts Receivable and Cost of Goods Sold.
B)Cost of Goods Sold and Finished Goods.
C)Finished Goods and Accounts Receivable.
D)Finished Goods and Intracompany Sales.

Question

Quizplus · Accepted Answer

In an internal transfer, the selling division records the event by crediting Finished Goods and Intracompany Sales. This is because the selling division is transferring goods to another division within the same company, therefore, it is not a sale to an external customer but an internal sale which is recorded as Intracompany Sales. The cost of goods sold is not recorded since there is no actual sale taking place.

In an Internal Transfer,the Selling Division Records the Event by Crediting