Final answer:
Natural resources are initially recorded as land or raw materials, become inventory upon extraction, and are recorded as goods sold after being sold.
Step-by-step explanation:
Natural resources are first recorded as land or raw materials, then recorded as inventory when extracted; and lastly recorded as goods sold when sold. The cycle of natural resources begins with them being unaltered in nature, such as oil underground or trees in a forest, which are considered part of the land category in the business context. Once extracted, they become inventory for the business, such as crude oil stored in barrels or lumber in a warehouse, ready to be processed or sold. Once these resources have been sold, such as in the form of gasoline or wooden furniture, they are considered finished goods, reflecting their final transactional state in a company's records.
The life cycle of natural resources involves a sequential accounting process within a business context. Initially categorized as land or raw materials, natural resources like oil or trees are considered unaltered while still in nature. Upon extraction, they transition into the inventory phase for a business, becoming tangible assets like stored crude oil or lumber awaiting processing or sale. Subsequently, when these resources are transformed into final products and sold—such as gasoline or wooden furniture—they are recorded as finished goods. This accounting cycle reflects the progression from raw, untouched resources in their natural state to inventory assets as they are extracted and processed, culminating in the ultimate recording of finished goods upon their sale, providing a comprehensive overview of the resource's journey within a company's records.