Question

1. A process cost system uses just two inventory accounts, raw materials inventory and work in process inventory.

True or False

2. Job-order cost systems are used by many service businesses; process cost systems are not applicable to service businesses.

True or False

3. Factory insurance is an indirect product cost and part of overhead.

True or False

4.Payment of cash for sales staff salaries is an asset exchange transaction.

True or False

5. The primary advantage of process cost systems is that there is no underapplied or overapplied overhead to account for.

True or False

Answer 1

1) False, Processs cost uses3 Accounts Raw material, WIP and Finish Goods .

2) False,Service Orgainisation if providing same service then it can use Process Costing

3) Factory Insurance is Period cost.

4)False, Asset exchange Transaction is anTransaction Under which both side assets are Exchanged Like Inventroy Purchased for cash. In Question one is Expense i.e. Salary other is asset.

5) False, Under Process costing Under applied and overapplied overhead arise.

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