9RQ
Question
List the three inventory accounts used by manufacturing companies, and describe each.
Step-by-Step Solution
Verified Answer
The three inventory accounts are the raw material inventory, work-in-process inventory, and finished goods inventory.
1Definition of Inventory
The inventory is defined as the goods which are ready to sell or the raw material which can be used for production.
2Three inventory accounts
The three inventory accounts used by manufacturing companies are as follows:
Raw Material Inventory (RM): It includes all the materials which can be used to make a product.
Work-in-Process Inventory (WIP): It includes all the goods which are in the manufacturing process which are not yet completed.
Finished Goods Inventory (FG): It includes all the goods which are completed but not yet sold to the customers.