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Multiple Choice
Which of the following is an example of finished-goods inventory for an apparel company?
A
Work-in-process garments still being sewn
B
Shirts that are packaged and ready for sale in the warehouse
C
Cotton fabric rolls stored in the production area
D
Thread and buttons purchased for future use
Verified step by step guidance
1
Understand the concept of finished-goods inventory: Finished-goods inventory refers to products that are completed and ready for sale to customers. These items are no longer undergoing production or assembly processes.
Analyze the options provided: Evaluate each option to determine whether it represents a product that is completed and ready for sale or still in the production process.
Option 1: Work-in-process garments still being sewn. These are not finished goods because they are still undergoing production and are classified as work-in-process inventory.
Option 3: Cotton fabric rolls stored in the production area. These are raw materials, not finished goods, as they have not been transformed into a completed product.
Option 4: Thread and buttons purchased for future use. These are also raw materials and not finished goods. The correct answer is Option 2: Shirts that are packaged and ready for sale in the warehouse, as they are completed products ready for sale.