What are Raw Materials?
Raw materials are basic substances or things that haven’t been changed much yet and are super important for making stuff. Companies need these raw materials to create their products. These materials are usually taken from nature and then turned into other things that companies use to make their final products. Raw materials are a crucial part of how companies manage their stuff and make the things they sell. Accountants keep track of these materials by putting them under current assets on the company’s list of things they own. But sometimes, the prices of these raw materials can go up and down a lot because of things like how much people want them, problems in making them, and rules from the government. So, managing and keeping an eye on raw materials is a big deal for firms.
Geeky Takeaways:
- Raw materials are defined as the basic substances or things that are minimally processed and essential for product manufacturing.
- Raw materials are used by firms as inputs to transform into final goods for sale.
- Raw materials are typically derived from nature and then modified for business use.
Table of Content
- Sources of Raw Materials
- Importance of Raw Materials
- Accounting for Raw Materials
- Types of Raw Materials
- Examples of Raw Materials
- Difference Between Direct Raw Materials and Indirect Raw Materials
- Frequently Asked Questions (FAQs)