Firms Employ the Following Types of Inventories

question 45

Multiple Choice

Firms employ the following types of inventories:

• A)raw material.
• B)work in process.
• C)finished goods.
• D)all of these options.

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Definitions:

Control Environment

The set of standards, processes, and structures that provide the foundation for carrying out internal control across the organization, influencing the overall attitude, awareness, and actions concerning the internal control system and its importance to the entity.

Internal Control

Processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Reasonable Assurance

A level of confidence that the controls in place in an organization are adequate to mitigate risks to an acceptable level.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less.