Question

Inventories include which of the following items?

A. all assets held for sale
B. goods in production
C. goods directly consumed in production
D. finished goods

Answer 1

Inventories include all assets held for sale, goods in production, and finished goods, but not goods directly consumed in production. Inventories are part of the assets a business holds which can vary based on the business performance and market demand.

Option 'C' is the correct.

Step-by-step explanation:

Inventories include a range of items held by a business. Specifically, inventories encompass all assets held for sale, which are the finished goods ready to be sold to customers.

Goods in production, also known as work-in-process, form a part of inventories because they are items being manufactured but are not yet complete.

However, goods that are directly consumed in production, such as raw materials, do not typically stay within inventories once they are used in the production process, thus are not considered a part of inventories for accounting purposes.

Therefore, inventories would selectively include all assets held for sale, goods in production, and finished goods, but not goods directly consumed in the production of other goods.