When the amount of scrap is immaterial, which of the following is the easiest accounting entry when recording scrap sold for cash?
A) Sales of Scrap Cash
B) Manufacturing Overhead Control Cash
C) Cash Scrap Revenues
D) Sales of scrap Accounts Receivable

Question

Quizplus · Accepted Answer

When the amount of scrap is immaterial, selling the scrap for cash would result in a small revenue which can be recorded simply by using a cash scrap revenue account. Option A is not appropriate as it does not indicate the source of the sale. Option B involves the manufacturing overhead control account, which implies that the scrap was produced as a byproduct during the manufacturing process. Option D wrongly implies that the scrap was sold on credit, when the question clearly states that the scrap was sold for cash.

When the Amount of Scrap Is Immaterial, Which of the Following