University of Central Florida (UCF) ACG2071 Principles of Managerial Accounting Practice Test 1

The financial statement that includes the total of finished goods is the balance sheet. This statement provides a snapshot of a company's financial position at a specific point in time, detailing its assets, liabilities, and equity. Finished goods are considered a current asset, as they represent products that are completed and ready for sale. Therefore, they are reported under current assets on the balance sheet, along with other inventory categories.

In contrast, the income statement focuses on revenues and expenses over a period, reflecting the company’s profitability but not detailing individual asset accounts like finished goods. The cash flow statement tracks the movement of cash within the business, detailing cash inflows and outflows but not itemizing inventory. The retained earnings statement outlines the changes in retained earnings over a specified period, showing profits retained in the business after dividends but does not include any asset totals like finished goods. This makes the balance sheet the correct answer, as it directly includes the total of finished goods within the current assets section.