Answered: Explain the impact of using indirect…

Business

Accounting

Explain the impact of using indirect material on accounting equation.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 3Q: How do revenues and expenses affect the accounting equation?

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Question

Explain the impact of using indirect material on accounting equation.

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Expert Solution

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Indirect materials are materials used in the production process, but which cannot be linked to a specific product or job. Alternatively, they may be used in such insubstantial quantities on a per-product basis that it is not worthwhile to track them as direct materials (which involves including them in the bill of materials). Thus, they are consumed as part of the production process, but are not integrated in substantial amounts into a product or job. Examples of indirect materials are:

Cleaning supplies
Disposable safety equipment
Disposable tools
Fittings and fasteners
Glue
Oil
Tape

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