Final answer:
The correct statement about the types of inventory is b) Work-in-progress inventory represents goods in the production process. Statement a) is incorrect because raw materials inventory does not include finished products, and statement c) is incorrect because finished goods inventory does not consist of materials awaiting processing.
Step-by-step explanation:
The question pertains to the different types of inventory maintained by businesses. Let's define each one to clarify which statements are correct:
- Raw materials inventory includes items that a company uses in the production of its products but which are not yet in the production process.
- Work-in-progress (WIP) inventory represents goods that are in the process of being manufactured but are not yet complete.
- Finished goods inventory consists of completed products ready for sale to customers.
Based on these definitions:
- a) Raw materials inventory does not include finished products ready for sale—that is the definition of finished goods inventory.
- b) Correct, WIP inventory represents goods in the production process.
- c) Finished goods inventory does not consist of materials awaiting processing; this defines raw materials inventory.
- d) Only b is correct, indicating that work-in-progress inventory represents goods in the production process.