Finished goods are inventory that is ready for sale. Which statement about finished goods is correct?

• A. They are raw materials used in production
• B. They are partially completed products
• C. They are completed goods ready for sale
• D. They are maintenance supplies

Answer: (C)

Finished goods are inventory that has completed production and is ready for sale. They are the final form of products that can be stored and sold without any further processing. Raw materials are the inputs used to make products, and work in progress consists of items that are only partly completed. Maintenance supplies are items used for upkeep and aren’t intended for sale. Therefore, the statement that finished goods are completed goods ready for sale is the correct one. In cost accounting, finished goods bear the production costs until they are sold, at which point those costs become cost of goods sold.