Why Do Raw Materials Resemble Component Parts and Materials

question 150

Multiple Choice

Why do raw materials resemble component parts and materials?

• A) They are considered capital investments to be held for several years.
• B) They are part of the buyers' final products.
• C) They are finished products before they enter into the production of other products.
• D) They are expended without finding their way into finished goods.

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Definitions:

Expenses

Costs incurred in the operation of a business; these are necessary for the company to generate revenues.

Financial Reports

Documents that provide an overview of a company's financial condition, including balance sheets, income statements, and cash flow statements, among others.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal indicating that the ledger accounts are properly balanced.

Residual Value

The estimated value that an asset will have at the end of its useful life.