Final Answer:
Property, plant, and equipment are typically classified as:
Land and buildings
Machinery and equipment
Furniture and fixtures
Inventories are classified as:
4. Raw materials and finished goods (Option 4)
Step-by-step explanation:
Property, plant, and equipment (PPE) represent tangible long-term assets used in the production of goods and services. Land and buildings, machinery and equipment, and furniture and fixtures are common examples of PPE. These assets have a useful life of more than one accounting period and are reported on the balance sheet.
Inventories, on the other hand, are short-term assets held for sale or in the process of production. Raw materials, which are the basic materials used to manufacture products, and finished goods, which are the end products ready for sale, fall under the category of inventories. Inventories are considered current assets as they are expected to be converted into cash or used up within a relatively short time.
Proper classification of these assets is essential for accurate financial reporting. PPE is crucial for understanding a company's investment in productive assets, while inventories are critical for assessing the current state of goods available for sale or use in production. This distinction helps stakeholders, including investors and creditors, make informed decisions about a company's financial health and performance.(Option 4)