CAF-5 · Chapter 5 · Question 9 of 10
When the production of a batch of goods is fully completed on the factory floor, the total cost of these completed units must be transferred out of the production account. What is the correct journal entry for this transfer?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit: Finished Goods Control / Credit: Work in Process (WIP) Control
Explanation
When goods are finished, they physically move from the factory floor to the finished goods warehouse. In accounting, this is reflected by transferring the accumulated cost out of WIP Control (Credit) and into the Finished Goods Control inventory account (Debit).
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