Component Materials Differ from Raw Materials in That Component Materials

question 27

Multiple Choice

Component materials differ from raw materials in that component materials are considered as:

• A)processed goods in the final product.
• B)not being part of the final product.
• C)finished goods.
• D)major capital goods.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, often at the end of an accounting period, rather than continuously.

Specific Invoice Method

Valuing of inventory where each item is identified with a specific invoice.

Cost of Goods Sold

Financial obligations directly related to producing a company’s saleable goods, encompassing material and labor costs.

Periodic Inventory System

A method of inventory valuation where updates to inventory levels and cost of goods sold are made periodically at the end of an accounting period, rather than after each sale or purchase.