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Question

Which of the following statements are correct?
I. Inventory includes raw materials, finished goods and work-in-progress
II. Inventory is a part of the working capital
III. Inventory includes goods likely to be purchased.

A
I, II and III
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B
II and III
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C
I and III
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D
I and II
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Solution

The correct option is D I and II
Inventory includes raw material, finished goods and work-in-progress and inventory is a part of working capital. Working capital is current assets - current liabilities. Current assets include stock as it can be converted in cash within a period of 1 year.

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