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

Question

Quizplus · Accepted Answer

Raw materials purchased on account are recorded with a debit to Raw Materials Inventory (as the goods are being added to inventory) and a credit to Accounts Payable (as the company owes the supplier money for the materials received). This is the correct accounting entry for a process costing system.

The Purchase of Raw Materials on Account in a Process