Question

Inventories is the value of raw materials held, work-in-process and finished good held by the business.

Answer 1

Answer:

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Explanation:

Inventory is the term for the goods available for sale and raw materials used to produce goods available for sale. Inventory represents one of the most important assets of a business because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company's shareholders.

Understanding Inventory

Inventory is the array of finished goods or goods used in production held by a company. Inventory is classified as a current asset on a company's balance sheet, and it serves as a buffer between manufacturing and order fulfillment. When an inventory item is sold, its carrying cost transfers to the cost of goods sold (COGS) category on the income statement.

Answer 2

We are asked what are inventories for which we are provided three options and we have to choose the correct option. The correct option will be the third option of finished goods.

• Inventories are the goods that are manufactured by the company.
• In other words, the goods that are ready to be sold.
• When the goods enter the manufacturing concern they are in the form of raw materials.
• These raw materials are stored in the stock room or store room and used when required.
• Then the raw materials are processed and worked upon.
• While the materials are worked upon they are called work-in-progress.
• After processing the goods are converted into finished goods or inventories.
• So the correct answer will be the third option finished goods.

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