Question

Select the incorrect statement regarding cost flows through a process cost system.

Multiple Choice

• The three inventory accounts used are maintained on a perpetual basis.

• The process cost system is patterned after the physical flow of products as they move through the production process.

• Product costs are accumulated separately by job.

• A separate work in process account is maintained for each department or process.

Answer 1

	Select the incorrect statement regarding cost flows through a process cost system.
Answer	Product costs are accumulated separately by job.
Explanation:	Product costs are accumulated separately by job under job costing, not under process costing. Under process costing, costs are accumulated by process or department.
	Under process costing, the three inventory accounts used are maintained on a perpetual basis and a separate work in process account is maintained for each department or process. The process cost system is patterned after the physical flow of products as they move through the production process. All these statements are correct.
Conclusion:	Product costs are accumulated separately by job is an incorrect statement.

Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.