Future Business Leaders of America (FBLA) Business Management Practice Test

What term describes the partially finished goods that a company keeps in stock?

1. Deteriorated

2. Indirect costs

3. Inventory

4. Obsolete

The correct answer is: Inventory

The term that describes the partially finished goods that a company keeps in stock is "inventory." Inventory encompasses all items held by a company for the purpose of resale or production, including raw materials, work-in-progress (partially finished goods), and finished goods. This is a vital aspect of business operations, as effective inventory management ensures that a company can meet customer demand without overproducing or incurring unnecessary holding costs. In the context of the other options, "deteriorated" refers to goods that have declined in quality or value, "indirect costs" are expenses that are not directly tied to the production of goods, such as overhead, and "obsolete" describes items that are no longer useful or relevant in the market. These terms, while relevant in their contexts, do not accurately describe the concept of partially finished goods maintained in stock.