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CA Intermediate · Cost and Management Accounting · Cost Accounting Systems

Which of the following entries is made in a non-integrated system when direct materials are issued to production?

When direct materials are issued to production, Work-in-Progress Control Account is debited and Stores Ledger Control Account is credited, because the cost moves from stores into production.

  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 Cost Ledger Control A/c, Credit Stores Ledger Control A/c
  4. DDebit Finished Goods Control A/c, Credit Cost Ledger Control A/c

Explanation

Issue of direct material moves cost from stores to production, so Work-in-Progress Control is debited and Stores Ledger Control is credited. Option B reverses the entry and would represent a return to stores.

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