In a process cost accounting system, direct material costs incurred are recorded:
A) Indirectly to a Goods in Process Inventory account.
B) Indirectly to a Finished Goods Inventory account.
C) Directly to a Goods in Process Inventory account.
D) Directly to a Finished Goods Inventory account.
E) Directly to a Cost of Goods Sold account.

Question

Quizplus · Accepted Answer

In a process cost accounting system, direct material costs incurred are recorded directly to a Goods in Process Inventory account. This account is used to accumulate the total cost of the product as it moves through the production process. The direct material costs are added to the beginning balance of the account to calculate the total cost of the goods in process. This cost is then used to compute the cost of the finished product at the end of the production process.

In a Process Cost Accounting System, Direct Material Costs Incurred