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Question
Define inventory or stock. Explain briefly the different kinds of inventory.
Define inventory or stock. Explain briefly the different kinds of inventory.
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Solution
It is the article which is held by an enterprise for the purpose of sale in the ordinary course of business or for the purpose of using it in the production of goods meant for sale. Inventory is of the following kinds:
(i) Inventory of Raw Material: It includes raw material used for manufacturing of goods e.g., a stock of cloth to be used for shirts.
(ii) Inventory of Work-in-progress: It comprises of goods which are in the process of being finished i.e., they are partly finished goods.
(iii) Inventory of Finished Goods: It includes finished goods in saleable condition.
It is the article which is held by an enterprise for the purpose of sale in the ordinary course of business or for the purpose of using it in the production of goods meant for sale. Inventory is of the following kinds:
(i) Inventory of Raw Material: It includes raw material used for manufacturing of goods e.g., a stock of cloth to be used for shirts.
(ii) Inventory of Work-in-progress: It comprises of goods which are in the process of being finished i.e., they are partly finished goods.
(iii) Inventory of Finished Goods: It includes finished goods in saleable condition.
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