Which of the following is true of Finished Goods Inventory?
A) Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold.
B) Finished Goods Inventory is an account used by a merchandiser and includes completed goods that have not yet been sold.
C) Finished Goods Inventory is an account used by service companies in lieu of raw materials inventory.
D) Finished Goods Inventory is an account used by a manufacturer in lieu of raw materials inventory.

Question

Quizplus · Accepted Answer

Finished Goods Inventory is an account specifically used by manufacturers to account for products that have been completed but have not yet been sold to customers. This differentiates it from raw materials inventory, which consists of the materials used to make these products, and work-in-process inventory, which includes goods that are in the process of being manufactured but are not yet complete. Merchandisers, who sell goods but do not manufacture them, and service companies, which do not sell physical goods, do not use the Finished Goods Inventory account in the same way.

Which of the Following Is True of Finished Goods Inventory