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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Name the three inventory accounts for a manufacturing business and describe what each balance represents at the end of an accounting period.

To determine

Inventory:

Inventory refers to the raw materials, work-in progress goods, and the finished goods or products that are held by the business to sell or make it ready for sale, in the future date.

To indicate: The three inventory accounts for a manufacturing business, and to describe what each balance represents at the end of an accounting period.

Explanation

The three types of inventory accounts for a manufacturing business, and the representation of each balance at the end of an accounting period are as follows:

Materials Inventory:

  • Materials inventory comprises of the direct material costs, and indirect material costs.
  • The balance in the materials inventory at the end of the accounting period represents the inventories that have not entered into the process of manufacturing.

Work in process Inventory:

  • Work in process inventory comprises of the direct material costs, direct labor costs, and factory overhead costs...

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