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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.

There are three components of Costs which are very important in the manufacturing of products These are the basis of the costs on which entire production are produced for the firm.                     1.       Material                     2.     Labor                     3.     Expense 1.   Material The substance from which the finished product is made is known as material. OR                  Material means those components or commodities which are utilized during production. Material is divided into two types: 1.   Direct Material 2.   Indirect Material                     1.     Direct Material   ...