Finished Goods Are a Classification of Inventory for a Manufacturer

question 106

True/False

Finished goods are a classification of inventory for a manufacturer that are completed and ready for sale.

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Definitions:

Section 1245

A section of the U.S. Internal Revenue Code that defines the tax treatment of the gain from the sale of depreciable property.

Recapture

A process in which previously deducted or credited amounts are added back to taxable income or tax liability under certain conditions.

Short-term Capital Gain

A profit from the sale of an asset held for one year or less, taxed as ordinary income.

Long-term Capital Loss

A loss realized from the sale of a capital asset held for more than one year, which can offset capital gains and reduce taxable income.