In: Accounting
Which of the following would be included in inventory? Yes or No
(a) Raw materials costs of leather to a manufacturer of leather furniture
(b) The cost of cans of corn held on the shelves of a grocery store
(c) The cost of a truck in the process of being manufactured by an automobile manufacturer
(d) The cost of land being held for development to a property developer
(e) The cost of a van being used as a courtesy vehicle to an automobile service centre
(f) The costs of construction for a home being built for a specific customer to a builder
(g) The cost of soap and paper towels for the washrooms of a restaurant
Included/Not included in Inventory | Reason: | |
(a) Raw materials costs of leather to a manufacturer of leather furniture | Included | Cost of raw material is included into raw material inventory. |
(b) The cost of cans of corn held on the shelves of a grocery store | Included | Cost of finished goods or traded goods is included into inventory. |
(c) The cost of a truck in the process of being manufactured by an automobile manufacturer | Included | Work in progress inventory are also included in the WIP inventory. |
(d) The cost of land being held for development to a property developer | Not included | It would not be included because property developer is not going to deal in sale or purchase of land but in sale or purchase of flats or house. |
(e) The cost of a van being used as a courtesy vehicle to an automobile service centre | Not included | Automobile service center is not dealing in trading of van. |
(f) The costs of construction for a home being built for a specific customer to a builder | Included | Home is always an inventory for builder irrespective of its made in general or for a specific customer. |
(g) The cost of soap and paper towels for the washrooms of a restaurant | Not included | Restaurant is not selling soap or paper towels. These are part of Supplies |