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In: Accounting

1) What are the three inventory accounts used to record manufacturing cost? In what order are...

1) What are the three inventory accounts used to record manufacturing cost? In what order are these accounts used?

2) To what "family" do inventory accounts belong - asset, liability, equity, revenue or expense? On what financial statement are they reported?

3) At what point do manufacuring costs leave the last inventory account and into what account are they moved? On what financial statement is this account reported?

Solutions

Expert Solution

The three main inventory accounts used to record manufacturing costs

1.Rawmaterials inventory

2.Work in progress acc

3.Finished goods account

Rawmaterials Inventory account :This account includes all the purchases which are related to production of a product

Work in progress acc : The purchase goods transferred to work in progress acc in production process

Finished Goods: Once these goods are manufactured they are transferred to finished goods account.

2.Inventory belongs to an asset and it is shown in balance sheet under assets side

3.Once manufacturing is completed and the product is ready to use they are transferred to finished goods acc and lies here until sale occurs and it is shown under inventories on asset side of balance sheet.

ekkarill92 answered 1 year ago
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