True Or False Answer | When Direct Materials Are Transferred Into Production, The Journal Entry Includes A Debit To The Work In Process Inventory Account

The Correct Answer Is “True”.

So, the statement is “True”, as we debit Work In Process Inventory Account and credit Direct Materials Account in order to transfer or close Direct Materials Account to Work In Process Inventory Account during the accounting cycle.

In the manufacturing process, direct material and work in process are two inventories on hand during the accounting cycle. These are calculated only in manufacturing business, which produces goods from raw material, because the manufacturing companies make the product from raw material and then process it and finally completed the product, which can be sold to customers in the market. After that cost of goods manufactured are computed. When the product is complete, another inventory called finished goods inventory is calculated. This inventory is also used in trading & merchandising concerns.