Multiple Choice
In absorption costing, costs assigned to units of product include which of the following manufacturing costs?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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In the context of inventory accounting, units of product that are only partially complete at the end of an accounting period are classified as which type of inventory?
A
Work-in-process inventory
B
Raw materials inventory
C
Merchandise inventory
D
Finished goods inventory
Verified step by step guidance1
Understand the concept of inventory classification: Inventory is categorized based on its stage in the production or sales process. The main types are raw materials, work-in-process, finished goods, and merchandise inventory.
Define 'Work-in-process inventory': This refers to products that are partially completed during the production process but are not yet finished. These items require additional work before they can be sold as finished goods.
Define 'Raw materials inventory': This includes the basic materials and components that are used to produce goods but have not yet entered the production process.
Define 'Merchandise inventory': This refers to goods that are purchased by a retailer or wholesaler for resale without any further processing or manufacturing.
Define 'Finished goods inventory': These are completed products that are ready for sale to customers. They do not require any additional processing.
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Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory practice set
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