The Three Forms or States in the Development of Inventory

question 2

True/False

The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods.

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Definitions:

Periodic

Pertaining to or occurring at regular intervals.

Perpetual Basis

An approach or method without a predetermined end date, continuing indefinitely.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

LIFO Reserve

The difference between the cost of inventory calculated using the Last In, First Out method and the First In, First Out method.