credited to each process a/c
debited to respective process a/c
shown only in the finished stock a/c
shown in the balance sheet
Answer is Wrong!
Answer is Right!
The correct answer is: A. credited to each process a/c
Inter-process profits are the profits that are earned by a company from the sale of
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goods or services to another company within the same group. These profits are usually credited to the process account of the company that sold the goods or services.
The process account is a type of account that is used to track the costs and revenues associated with a particular process. The costs that are typically included in a process account include the cost of materials, the cost of labor, and the cost of overhead. The revenues that are typically included in a process account include the sales revenue and the cost of goods sold.
The process account is used to calculate the profit or loss that is associated with a particular process. The profit or loss is then transferred to the income statement.
The following are the explanations of each option:
- Option A: Credited to each process a/c. This is the correct answer. Inter-process profits are credited to the process account of the company that sold the goods or services.
- Option B: Debited to respective process a/c. This is not the correct answer. Inter-process profits are not debited to the process account.
- Option C: Shown only in the finished stock a/c. This is not the correct answer. Inter-process profits are not shown only in the finished stock account.
- Option D: Shown in the balance sheet. This is not the correct answer. Inter-process profits are not shown in the balance sheet.