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Three inventory accounts are used by manufacturing enterprises: 1) materials, 2) work in process, and 3) finished goods. These inventory accounts record the costs of manufacturing goods. The materials account records the costs of materials purchased for production purposes. When materials are used in production, the work in process account is debited. The work in process inventory records materials, labor, and factory overhead costs. When goods are completed the finished goods account is debited. When goods are sold the cost of goods sold accounts is debited. Each of these accounts are controlling accounts, and the detailed information is present is subsidiary ledgers.
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