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CMA Intermediate · Cost Accounting · Integrated Accounting System

In an integrated accounting system, where is the cost of raw materials issued to production first recorded?

Direct materials issued to production are debited to Work-in-Progress Control Account and credited to Stores Ledger Control Account, because the cost moves from the stores inventory into production. The reverse entry would show materials returned to stores, not issued.

  1. ADebited to Work-in-Progress Control Account and credited to Stores Ledger Control AccountCorrect
  2. BDebited to Cost of Sales Account and credited to Creditors Account
  3. CDebited to Finished Goods Control Account and credited to Costing Profit and Loss Account
  4. DDebited to Stores Ledger Control Account and credited to Work-in-Progress Control Account

Explanation

Under integrated accounting, a single set of books is kept. Direct material issued moves from stores to production, so Work-in-Progress Control is debited and Stores Ledger Control is credited. The reverse entry in option 4 would represent a return of material to stores, not an issue.

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