Question

In what order should the three inventories of a manufacturing business be presented on the balance sheet?

Answer 1

The three inventories of a manufacturing business should be presented on the balance sheet in the order of raw materials inventory, work-in-progress inventory, and finished goods inventory.

Step-by-step explanation:

The three inventories of a manufacturing business should be presented on the balance sheet in the following order:

1. Raw materials inventory: This includes the materials and components that are used in the production process but have not yet been transformed into finished goods.
2. Work-in-progress inventory: This includes goods that are partially completed and still in the production process.
3. Finished goods inventory: This includes completed goods that are ready for sale but have not yet been sold.

By presenting the inventories in this order, the balance sheet provides a clear picture of the manufacturing process, from raw materials to finished goods.