The purchase of raw materials on account in a process costing system is recorded with a:
A) Debit to Purchases and a credit to Accounts Payable.
B) Debit to Purchases and credit to Cash.
C) Debit to Accounts Payable and a credit to Raw Materials Inventory.
D) Debit to Raw Materials Inventory and a credit to Accounts Payable.
E) Debit to Work in Process Inventory and a credit to Accounts Payable.

Question

Quizplus · Accepted Answer

Raw materials purchased on credit are recorded by debiting the Raw Materials Inventory account, and crediting the Accounts Payable account. This reflects that the company has received the goods but has not yet paid for them. Option D correctly shows this accounting treatment. Option A incorrectly debits the Purchases account instead of the Raw Materials Inventory account. Option B is incorrect since it suggests that the purchase was made with cash rather than on credit. Option C is incorrect because it debits the Accounts Payable account instead of the Raw Materials Inventory account. Option E is incorrect because it incorrectly debits the Work in Process Inventory account.

The Purchase of Raw Materials on Account in a Process