Which of the following statement(s) is (are) correct? I. It is easy to distinguish the balance sheet of a company that uses a process costing system from that of a company that uses job-order costing
II) A process cost system requires a work in process account for each processing department, while a job order system uses a single work in process account
III) Process cost systems use multiple Finished Goods Inventory accounts
A)I only
B)II only
C)II and III
D)I, II, and III

Question

Quizplus · Accepted Answer

Statement I is incorrect because the balance sheet of a company that uses a process costing system is not readily distinguishable from that of a company that uses job-order costing.

Statement II is correct because a process cost system requires a work in process account for each processing department, while a job order system uses a single work in process account.

Statement III is incorrect because process cost systems generally use a single Finished Goods Inventory account, which contains the total cost of all the units completed during the period.

Which of the Following Statement(s) Is (Are) Correct? I