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CMA Intermediate · Cost Accounting · Integrated Accounting System

In an integrated (single-ledger) accounting system, when raw materials costing Rs 80,000 are issued to production for a job, which entry is passed?

Direct materials issued to production are recorded by debiting Work-in-Progress Control Account and crediting Stores Ledger Control Account, because the cost leaves stores and becomes part of the cost of jobs in progress under the integrated system.

  1. ADebit Work-in-Progress Control A/c, Credit Stores Ledger Control A/cCorrect
  2. BDebit Stores Ledger Control A/c, Credit Work-in-Progress Control A/c
  3. CDebit Finished Goods Control A/c, Credit Stores Ledger Control A/c
  4. DDebit Cost of Sales A/c, Credit Work-in-Progress Control A/c

Explanation

Issue of direct materials moves cost from stores to production. Hence Work-in-Progress Control is debited and Stores Ledger Control is credited. The reverse entry in option B would record a return of materials, not an issue.

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