Multiple Choice
Which of the following business expenses is generally deductible for tax purposes?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT one of the four main types of inventory?
A
Accounts receivable
B
Finished goods
C
Work-in-process
D
Raw materials
Verified step by step guidance1
Step 1: Understand the concept of inventory in Financial Accounting. Inventory refers to the goods and materials a company holds for the purpose of resale or production. The four main types of inventory are typically associated with manufacturing and production processes.
Step 2: Define the four main types of inventory: (1) Raw materials, which are the basic inputs used in production; (2) Work-in-process, which refers to goods that are partially completed; (3) Finished goods, which are completed products ready for sale; and (4) Merchandise inventory, which applies to retail businesses and includes goods purchased for resale.
Step 3: Recognize that 'Accounts receivable' is not a type of inventory. Accounts receivable refers to money owed to the company by customers for goods or services already delivered, and it is classified as a current asset, not inventory.
Step 4: Compare the options provided in the question to the definitions of inventory types. Identify which option does not fit the description of inventory.
Step 5: Conclude that 'Accounts receivable' is the correct answer because it is not one of the four main types of inventory.
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