Multiple Choice
In a manufacturing company, Finished Goods Inventory is reported on which financial statement?
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5. Inventory
Merchandising Company vs. Manufacturing Company
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In a manufacturing company, which types of inventory are typically reported (in the order they flow through production)?
A
Merchandise inventory only
B
Raw materials inventory, work in process inventory, and finished goods inventory
C
Supplies inventory and prepaid expenses only
D
Raw materials inventory and merchandise inventory only
Verified step by step guidance1
Understand that in a manufacturing company, inventory is classified based on the production process stages.
Identify the three main types of inventory in manufacturing: Raw materials inventory, Work in process (WIP) inventory, and Finished goods inventory.
Raw materials inventory includes all the basic materials and components that will be used in production but have not yet entered the manufacturing process.
Work in process inventory consists of goods that are currently in the production process but are not yet complete.
Finished goods inventory includes all completed products that are ready for sale to customers.
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