Question

true or false, explain

/ When raw materials are used in the manufacturing process for a manufacturing firm, they should immediately be recorded as an operating expense on the income statement.

/ The journal entry to record bad debt expense is made during the year in which it is determined that a particular receivable is uncollectible, regardless of the year of sale.

Answer 1

1. False.

When raw materials are used in the manufacturing process for a manufacturing firm, they should be immediately recorded as Cost of Goods sold. Raw materials used are a part of cost of goods sold which are directly used in the manufacturing process. On the contrary, operating expenses are the expenses which are not directly involved in the manufacturing process.

2. True

The entry for bad debts should be recorded when it is determined that the debt is uncollectible. It is because of the Conservatism principle of the Accounting which says that anticpate all losses and expenses. So this statement is true.