Gulliver, Inc., which uses a process-costing system, transfers completed production from Department no. 1 to Department no. 2 for further work. Which of the following best describes the account that would be debited to record this transfer?
A) Cost of Goods Transferred.
B) Finished-Goods Inventory: Department no. 1.
C) Finished-Goods Inventory: Department no. 2.
D) Work-in-Process Inventory: Department no. 1.
E) Work-in-Process Inventory: Department no. 2.

Question

Quizplus · Accepted Answer

When production is transferred from one department to another in a process-costing system, the account debited is the Work-in-Process Inventory of the receiving department. In this case, Department no. 2 is the receiving department, so Work-in-Process Inventory: Department no. 2 would be debited.