In a manufacturing company, where are raw materials reported?

Raw materials are reported in the balance sheet as a current asset. This is because raw materials represent inventory that is still in the production process or awaiting use in manufacturing. They are considered resources that the company will use to generate revenue in its operations.

Classifying raw materials as a current asset highlights their liquidity and importance for production processes, as they are expected to be consumed within a standard accounting cycle, contributing to the production of finished goods that will eventually be sold. This classification contrasts with items listed in the income statement, cash flow statement, or statement of comprehensive income, which focus on different aspects of a company's performance and financial position. For example, the income statement deals with revenues and expenses during a specific period, whereas the cash flow statement tracks cash movements, and the statement of comprehensive income presents broader financial developments including gains and losses not included in the income statement. Thus, the correct placement for reporting raw materials is indeed the balance sheet.