Which Types of Inventories Does a Manufacturing Business Report on the Balance

question 149

Multiple Choice

Which types of inventories does a manufacturing business report on the balance sheet?

• A) finished goods inventory and work in process inventory only
• B) direct materials inventory and work in process inventory only
• C) direct materials inventory, work in process inventory, and finished goods inventory
• D) direct materials inventory and finished goods inventory only

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value.

Gain of $2,000

Represents an increase in wealth or resources, typically accounted for in financial statements when an asset is sold for more than its cost.

Estimated Useful Life

The expected period during which an asset is predicted to be usable for the purpose it was acquired.

Depreciation Expense

An accounting method to allocate the cost of a tangible asset over its useful life to represent wear and tear over time.