What is one of the three inventory accounts listed on a manufacturer’s balance sheet?

One of the three inventory accounts on a manufacturer's balance sheet is raw materials. This account represents the basic materials that a manufacturer uses in the production process but has not yet been transformed into finished goods.

Understanding inventory accounts is crucial for managerial accounting as they reflect the resources available for production and impact financial statements and performance analysis. Typically, the three inventory accounts for manufacturers are raw materials, work-in-progress, and finished goods. Raw materials are essential because they show the initial investment in production and help manage operations efficiently by ensuring that sufficient materials are on hand to meet production needs.

In the context of inventory management, effective tracking of raw materials enables businesses to optimize costs and production schedules. This is why recognizing raw materials as an inventory account is fundamental to understanding a manufacturer's financial situation and operational efficiency.