Question

1. Inventory that consists of the costs of the direct and indirect materials that have not yet entered the manufacturing process is known as ________. work in process inventory materials inventory finished goods inventory None of these choices are correct.

Answer 1

Answer:

materials inventory

Explanation:

An inventory is a term used to describe a list of finished goods, goods still in the production line and raw materials that would be used for the manufacturing of more goods in a bid to meet the unending consumer demands.

Basically, an inventory can be classified into three (3) main categories and these are; finished goods, work in progress, and raw materials.

An inventory is recorded as a current asset on the balance sheet because it's primarily the most important source of revenue for a business entity.

Generally, the three (3) main cost concept associated with an inventory include;

1. First In First Out (FIFO).

2. Last In First Out (LIFO).

3. Weighted average cost.

In Financial accounting, direct cost can be defined as any expense which can easily be connected to a specific cost object such as a department, project or product. Some examples of direct costs are cost of raw materials, machineries or equipments.

On the other hand, any cost associated with the running, operations and maintenance of a company refers to indirect costs. Some examples of indirect costs are utility bill, office accessories, diesel etc.

Materials inventory can be defined as an inventory that comprises of direct and indirect materials costs which have not been used in a manufacturing process.