Question

What inventory accounts would one expect to see in the accounting records of a company that makes furniture? (check all that apply)

1) cost of sales inventory
2) finished goods inventory
3) work in process inventory
4) raw materials inventory

Answer 1

In the accounting records of a furniture manufacturing company, one would expect to see raw materials inventory, work in process inventory, and finished goods inventory, which all track costs at various production stages. 'Cost of sales inventory' is not an account but part of the cost of goods sold calculation.

Step-by-step explanation:

In the accounting records of a company that makes furniture, one would expect to see several specific inventory accounts that reflect the different stages of the production process. These accounts typically include:

• Raw materials inventory: This account tracks the cost of raw materials that are yet to be used in the production process, like wood, metal, and upholstery materials.
• Work in process inventory: This account reflects goods that are in the production process but not yet completed. It includes materials, labor, and overhead costs incurred for partially completed goods.
• Finished goods inventory: Once the furniture is completed, it is moved to the finished goods inventory account, which represents the cost of manufactured products that are ready for sale.

It's important to note that 'cost of sales inventory' is not typically a separate account; instead, the cost of goods sold is calculated by considering the inventory at the start and end of the accounting period, as well as new purchases during the period.