COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debit Work in Process for $126, 000 and Credit Factory Overhead for $126, 000
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Debit Factory Overhead for $126, 000 and Credit Work in Process for $126, 000
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Debit Work in Process for $127, 500 and Credit Factory Overhead for $127, 500
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Debit Factory Overhead for $127, 500 and Credit Work in Process for $127, 500
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Detailed explanation-1: -The cost of goods available for sale equals the beginning value of inventory plus the cost of goods purchased. The cost of goods sold equals the cost of goods available for sale less the ending value of inventory.
Detailed explanation-2: -Create a journal entry When adding a COGS journal entry, debit your COGS Expense account and credit your Purchases and Inventory accounts. Inventory is the difference between your COGS Expense and Purchases accounts. Your COGS Expense account is increased by debits and decreased by credits.
Detailed explanation-3: -A cost sheet is a statement that shows the various components of total cost for a product and shows previous data for comparison. You can deduce the ideal selling price of a product based on the cost sheet. A cost sheet document can be prepared either by using historical cost or by referring to estimated costs.
Detailed explanation-4: -The cost of sales is a debit entry because it is an expense account. As an expense account, the cost of sales is increased by a debit entry and decreased by a credit entry.