Skip to content

CMA Intermediate · Cost Accounting · Integrated Accounting System

Under an integrated accounting system, when finished goods are transferred from the factory at the end of production, which entry is passed?

The entry is Debit Finished Goods Control Account and Credit Work-in-Progress Control Account at the cost of completed units. This moves cost from the production stage to the finished stock stage; the reverse entry would wrongly show finished goods returning to work in progress.

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

Explanation

Completed output leaves the work-in-progress stage and enters finished stock. So Finished Goods Control is debited and WIP Control is credited at the cost of the completed units. The reverse entry in option 2 would show finished goods going back to WIP.

Did you get it right without looking?

One question tells you little. A timed set on Integrated Accounting System shows your real accuracy, how long you take and where you lose marks.

Practise Integrated Accounting SystemFree diagnostic mock

More Integrated Accounting System questions