The three inventory accounts used in traditional costing are replaced by two inventory accounts in backflush costing.

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In traditional costing, three inventory accounts are used: raw materials inventory, work-in-process inventory, and finished goods inventory. However, in backflush costing, only two inventory accounts are used: raw materials inventory and finished goods inventory. This is because backflush costing assumes that all components and labor are added at the time of production completion, so there is no need for a work-in-process inventory account.

The Three Inventory Accounts Used in Traditional Costing Are Replaced