A business example
A garment maker checks 500 metres of fabric, 80 unfinished shirts and 120 finished shirts at month-end.
Raw material
Fabric has not yet entered production.
Work in progress
The 80 shirts still require work before sale.
Finished goods
The 120 completed shirts are ready for customers.
What this shows
Counting only finished shirts would miss stock tied up earlier in production. Valuation also needs costs, ownership and condition evidence.
What it is often confused with
Stock on a system is not proof of physical existence, ownership or recoverable value.
What to look at in your business
Compare stock counts with movement records, ageing and damaged or obsolete items.
Context and further reading
This entry explains the business term. The related guide below provides the next layer of context; any applicable legal test depends on the transaction and relevant period.
Kosha.Services · Updated 2 October 2026