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    Question

    Which of the following categories of inventory are

    typically reported by a company in its financial statements?
    A Raw material, processed goods, final goods Correct Answer Incorrect Answer
    B Raw material, work-in-progress, and final goods Correct Answer Incorrect Answer
    C Purchased goods, work-in-progress, and finished goods Correct Answer Incorrect Answer
    D Raw material, work-in-progress, and finished goods Correct Answer Incorrect Answer
    E Purchased goods, processed goods, finished goods Correct Answer Incorrect Answer

    Solution

    • Inventory is classified into three major categories in financial reporting: o Raw Materials → Basic inputs used in production (including consumables and stores). o Work-in-Progress (WIP) → Goods that are partially completed and still undergoing production. o Finished Goods → Fully completed products held for sale in the ordinary course of business. • This classification is crucial for valuation, cost accounting, and preparation of financial statements. Therefore, the correct classification is Raw material, Work-in-progress, and Finished goods.

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