Cost Flows and Inventory Accounts
For each of the following activities, identify the inventory account (Materials Inventory, Work in Process Inventory, or Finished Goods Inventory), if any, that is affected. If an inventory account is affected, indicate whether the account balance will increase or decrease. (Example: Moved completed units to finished goods inventory. Answer: Increase Finished Goods Inventory; decrease Work in Process Inventory.) If no inventory account is affected, use “None of these” as your answer.
1. Moved materials requested by production
2. Sold units of product
3. Purchased and received direct materials for production
4. Used direct labor and overhead in the production process
5. Received payment from customer
6. Purchased office supplies and paid cash
7. Paid monthly office rent.