Which item is not considered inventory?

Which item is not considered inventory?

• A. Computers displayed on the sales floor
• B. Computers used by salespeople for business operations
• C. Motherboards, processors, and hard drives
• D. Computers being assembled but not yet ready for sale

Answer: (B)

Inventory includes items a business plans to sell or that will become part of finished goods for sale, covering showroom stock, raw materials, and work-in-progress. Items used to run the business itself are not inventory; they are operating assets like equipment or office technology. Computers on the sales floor are for sale, so they are inventory. Computers used by salespeople for business operations aren’t for sale and aren’t held to be sold; they’re operating assets, so they’re not inventory. The motherboards, processors, and hard drives are components used to manufacture or assemble computers, which are inventory, either as raw materials or work-in-progress. Computers being assembled but not yet ready for sale are also inventory as work-in-progress.

Inventory includes items a business plans to sell or that will become part of finished goods for sale, covering showroom stock, raw materials, and work-in-progress. Items used to run the business itself are not inventory; they are operating assets like equipment or office technology.

Computers on the sales floor are for sale, so they are inventory. Computers used by salespeople for business operations aren’t for sale and aren’t held to be sold; they’re operating assets, so they’re not inventory. The motherboards, processors, and hard drives are components used to manufacture or assemble computers, which are inventory, either as raw materials or work-in-progress. Computers being assembled but not yet ready for sale are also inventory as work-in-progress.