Finished goods

In business and accounting, finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user.^{[ citation needed ]}

Manufacturing

Main articles: Manufacturing and Secondary sector of the economy

Manufacturing has three classes of inventory:

1. Raw material
2. Work in process
3. Finished goods

A good purchased as a "raw material" goes into the manufacture of a product. A good only partially completed during the manufacturing process is called "work in process". When the good is completed as to manufacturing but not yet sold or distributed to the end-user, it is called a "finished good". ^[1]

This is the last stage for the processing of goods. The goods are ready to be consumed or distributed. There is no processing required in term of the goods after this stage by the seller, although in many cases, a seller's finished goods become a buyer's input materials: for example, a company which makes packaging will see their completed packaging as finished goods but other companies will use the packaging within its own material operations. ^[2]

Finished goods is a relative term. In a supply chain management flow, the finished goods of a supplier can constitute the raw material of a buyer.

See also

• Final good

References

1. Gill, Suveera (2015). Cost and Management Accounting: Fundamentals and its Applications. Vikas Publishing House. p. 118. ISBN   978-9325990326 . Retrieved 2016-12-20.
2. Dalao, K., What is finished goods inventory and how do you account for it?, QuickBooks Blog, published on 14 February 2022, accessed on 11 August 2025