Observation

This question was problematic for the candidates.  The required responses to the various parts of the question are:

(a)        Four methods of taking inventory

-           Manual counts;
-           Perpetual method;
-           Periodic method;
-           ABC or pareto method.

(b)        (i)         Finished product inventory

There are stock of goods that have gone through the production process and are ready for purchase by the final consumers.  Such stock could be kept by the manufacturer after production for sale.

            (ii)        Raw material inventory

                        These are stock of unprocessed materials procured by a manufacturer for the production of finished goods. 
Such inventories are procured in their unprocessed state and would have to go through the production process to turn them to finished goods.    Examples of such products are flour, maize used in producing bread and animal feed.

            (iii)       Maintenance inventory

                          Inventory that consists of items consumed in the day-to-day activities of a business for typical service organisation, examples include paper, diskettes, forms for keeping records and receipts.  Manufacturing organisations use maintenance inventories such as lubricants, tools and repair parts.

            (iv)       Work-in-progress inventory

                          These are stock of materials that have been put into the production process.  Such materials are neither raw materials nor finished products because they have been put into the production process but have not been turned into finished goods.