Define the term inventory.
Solution
Inventory refers to the goods and materials that a business holds for the ultimate goal of resale, production, or utilization. It is a current asset on a company's balance sheet. There are three basic types of inventory: raw materials, work-in-progress, and finished goods.
Step 1: Raw Materials Raw materials are the basic components that a business uses in the production process to create its goods or services. For example, a car manufacturer would consider steel a raw material.
Step 2: Work-in-Progress Work-in-progress (WIP) inventory includes all materials that have started the production process but are not yet finished. Using the car manufacturing example, a car that is partially assembled would be considered WIP
Similar Questions
Inventory is classified as
The definition of inventory includes which of the following items?
Companies that produce the inventory they sell are referred to as
The definition of inventory includes which of the following items?Multiple select question.Items held for use or disposalItems currently in production for future saleMaterials used currently in the production of goods to be soldItems held for resale
Inventory is reported on the ______. Later, when the inventory is sold, it becomes ______.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.