Which item is NOT considered inventory?

Which item is NOT considered inventory?

• A. Farm products
• B. Goods held for sale
• C. Raw materials used in a business
• D. Work in process

Answer: (A)

Inventory covers items you hold for sale or are in the production process to be sold. Farm products fit a special category: they come from living organisms and are treated as biological assets, not as inventory until harvest. Once harvested, they become agricultural produce and may be carried as inventory. Therefore, farm products are not considered inventory in their pre-harvest form, while goods held for sale, raw materials, and work in process are standard inventory items.

Inventory covers items you hold for sale or are in the production process to be sold. Farm products fit a special category: they come from living organisms and are treated as biological assets, not as inventory until harvest. Once harvested, they become agricultural produce and may be carried as inventory. Therefore, farm products are not considered inventory in their pre-harvest form, while goods held for sale, raw materials, and work in process are standard inventory items.