64. The Store Holder should NOT issue materials in
excess quantities authorised on
(A) Demand Notes
(B) Approval Notes
(C) Material Warrants
(D) None of these
Answers
Answer:
none of these
Explanation:
Direct raw materials are placed in current assets as discussed above. Direct raw materials are expensed on the income statement within cost of goods sold. Manufacturing companies must also take added steps over non-manufacturing companies to create more detailed expense reporting on costs of goods sold. Direct raw materials are typically considered variable costs since the amount used depends on the quantities being produced.
Direct Raw Materials Budget
A manufacturer calculates the amount of direct raw materials it needs for specific periods to ensure there are no shortages. By closely tracking the amount of direct raw materials bought and used, an entity can reduce unnecessary inventory stock, potentially lower ordering costs, and reduce the risk of material obsolescence.
Raw materials may degrade in storage or become unusable in a product for various reasons. In this case, the company declares them obsolete. If this occurs, the company expenses the inventory as a debit to write-offs and credits the obsolete inventory to decrease assets.
KEY TAKEAWAYS
The primary production or manufacturing of goods requires raw materials.
The value of direct raw materials inventory appears as a current asset on the balance sheet.
Africa, the Middle East, and China have the world's largest supplies of natural resources as a percentage of their GDP.
Real-World Example
Africa, the Middle East, and China are thought to have the world's largest supplies of natural resources. According to World Bank data, the Congo Republic, South Sudan, Libya, and Iraq round out the world’s top natural resource producers by percentage of gross domestic product (GDP). The top producers as of 2018 by GDP include the following:
Congo Republic 54.9%
Mongolia 40.1%
Libya 43.4%
Iraq 45.7%
Kuwait 43.1%
Suriname 29.2%
Congo, Dem. Rep. 25.5%
Timor-Leste 33.5%
Guyana 19.7%
Liberia 21.6%
Equatorial Guinea 33.7%
Mauritania 16.2%
Saudi Arabia 29.5%1
The World Bank calculates these percentages using natural resource rent. Natural resource rent is the revenue remaining after the deduction of the cost to access resources.
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ARTICLE SOURCES
Related Terms
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Raw materials are materials or substances used in the primary production or manufacturing of goods. Raw materials are commodities that are bought and sold on commodities exchanges worldwide. Traders buy and sell raw materials in what is called the factor market because raw materials are factors of production as are labor and capital.
Raw Materials
Raw Materials Explained
Raw materials are used in a multitude of products. They can take many different forms. The kind of raw materials inventory a company needs will depend on the type of manufacturing they do. For manufacturing companies, raw materials inventory requires detailed budgeting and a special framework for accounting on the balance sheet and income statement