Which of the following items is typically included in the definition of inventory in financial accounting?

• A. Raw materials held for production
• B. Land held for future expansion
• C. Patents and trademarks
• D. Office equipment used in daily operations

Answer: (A)

Verified step by step guidance

1. Understand the definition of inventory in financial accounting: Inventory typically refers to assets that are held for sale in the ordinary course of business, in the process of production for such sale, or materials and supplies consumed in production.
2. Analyze each option provided in the question to determine whether it fits the definition of inventory.
3. Option 1: Raw materials held for production - These are materials used in the production process and are considered part of inventory as they are consumed to create goods for sale.
4. Option 2: Land held for future expansion - Land is classified as a long-term asset and not inventory because it is not held for sale or production purposes.
5. Option 3: Patents and trademarks - These are intangible assets and do not fall under the definition of inventory as they are not physical goods held for sale or production.
6. Option 4: Office equipment used in daily operations - Office equipment is classified as a fixed asset and not inventory because it is used in operations rather than being held for sale or production.