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In: Accounting

Which of the following accounts would not appear as an asset on a manufacturer's balance sheet?...

Which of the following accounts would not appear as an asset on a manufacturer's balance sheet?

Work in process
Overhead
Raw Materials
Finished goods

Solutions

Expert Solution

Overhead

Balance sheet is a statement which shows the assets, liabilities and owner's equity as on the particular date like at the end of december 31, March 31 etc.

Assets are resources that is owned or controlled by owners of business with the expectation of obtaining future economic benefits.Among various assets, inventory is an assets which is held for the business of owners.For example-Books for book shops, Television, Comuters etc. for electronics business, Building for real estate business etc.

Further there are three types of inventory-(1) Raw Materials inventory , (2) Work in process inventory and (3) Finished goods inventory. Suppose , ABC,Inc, is in the business of real estate.For ABC,Inc, sands, bricks etc. are raw materials.When these raw materials are used in the preparation of buliding etc. but building is not completed yet then to the extent to which these materials are used, labore are used, overhead are incurred are called work in process inventory and in last when building is completed and ready to sell, these become finished goods inventory.

In the current case, out of all alternative , Overhead is not any assets but it is part of work in process inventory and in balance sheet, overhead is not shown as as asset but Work in process inventry is shown.

Overhead are expenditure that is incurred in the manufacture of goods but not related directly with the production. For example. in the real esatate business, supervisor is appointed to supervise the working of building.Supervisor is not involved directly in the manufacturing like labor and other costs which are incurred due to product but are related indirectly with the completion of building.So, these types of costs are known as Overhead Costs.

ekkarill92 answered 1 year ago
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