Manufacturing firms use which of the following three inventory accounts?
A)Materials, Work-in-process, Transferred-out.
B)Materials, Work-in-process, Finished goods.
C)Materials, Finished goods, Transferred-out.
D)Work-in-process, Finished goods, Transferred-out.

Question

Quizplus · Accepted Answer

Manufacturing firms typically use the materials inventory account to track the cost of raw materials used in production, the work-in-process inventory account to track the cost of partially completed products, and the finished goods inventory account to track the cost of completed products ready for sale. The transferred-out account mentioned in choices A and C is not an inventory account, but rather a record of the cost of goods transferred from one inventory account (such as work-in-process) to another (such as finished goods). Choice D omits the materials inventory account.

Manufacturing Firms Use Which of the Following Three Inventory Accounts