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Finished Goods: Concept & Examples

Kristen Rogers, Yuanxin (Amy) Yang Alcocer
  • Author
    Kristen Rogers

    Kristen has her Bachelor of Arts in Communication (cum laude) with certificates in finance, marketing, and graphic design. She is a small business contributing writer for a finance website, with prior management experience at a Fortune 100 company and experience as a web producer at a news station. She's covered a variety of topics including news, business, entrepreneurship, music, and graphic design.

  • Instructor
    Yuanxin (Amy) Yang Alcocer

    Amy has a master's degree in secondary education and has been teaching math for over 9 years. Amy has worked with students at all levels from those with special needs to those that are gifted.

Learn what finished goods are. Examine the characteristics that make a finished product, and discover examples of the various types of finished goods. Updated: 03/29/2022

What are Finished Goods?

Finished goods, or finished products, definition refer to the products that have been created or manufactured and are ready to be sold. These products are essentially equipped to be placed on store shelves or otherwise made available to customers as they have completed the production process and include all necessary parts or components. In general, a good is considered finished when it moves through each of the steps within the production process and is fully assembled into the final product to be sold.

These products are seen throughout all industries where products are created and made available to consumers. Finished goods include everything from clothing to food to electronics. This term simply refers to the final product since it has completed the process and is ready to be sold to customers directly or to other businesses. Finished goods may also be referred to as final goods or consumer goods.

What Are Finished Goods?

Think back to the last time you went to a store and went shopping. What did you see on the store shelves? If you went to the grocery store, you saw all kinds of fruits and vegetables, meats, and a whole lot of processed food items. If you went to a department store, you saw lots of clothes, shoes, games, electronics, and a whole bunch of other stuff. What do all these things have in common?

They're all called finished goods; these are goods or products that do not require any further processing and are ready to be sold. So, the items you see when you go shopping are finished goods. You know that when you purchase the item, it will do what you expect it to do. This is because the makers of the product are done working on it. There is no more processing that needs to be completed or changes that need to be made to the product.

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  • 0:04 What Are Finished Goods?
  • 0:52 Merchandise
  • 1:28 Food Products
  • 2:41 Other Products
  • 3:40 Lesson Summary
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When are Goods Finished?

Products that are currently in production or in progress can eventually become finished goods. They are not yet complete as they do not contain all the necessary components. Finished goods are ready to be sold to either businesses or customers because all the processing is done. They are the final product that results after processing. Intermediate goods differ from finished goods as they are used to help create the finished goods. These are generally the raw materials considered components within the new product.

When a finished good has been sold, it is no longer considered a finished good. These goods which have been sold are now classified as merchandise. The goods may be regarded as merchandise as they are sold to the customer or as they are sold to other businesses, such as retailers. The reason goods are classified separately is due to accounting for sales made from these products. When they are sold as merchandise, they no longer count as assets of the company but are now added to the revenue made.

Types of Finished Goods

There are many different categories of finished goods, including various types of products. These categories can help to classify products based on their use and purpose. Two major categories of finished goods are durable and non-durable goods. Durable goods are the types of goods that last and can be used for several years. Examples of durable goods include appliances, electronics, furniture, and cars. Non-durable goods are the goods that are more short-term as the product tends to either expire or run out quickly. Some examples of non-durable goods include food, gasoline, toiletries, and makeup.

Food products can also be classified into different categories. Processed foods are the foods that can be eaten and don't require additional cooking or other steps. Some examples of processed foods include cheese, fresh bread, and meals provided by restaurants. These goods are only considered finished goods when they have all the ingredients for the final product.

Unprocessed foods are considered foods that have stayed in their original form and generally have not been cooked, mixed, or altered. Some examples of unprocessed foods include fresh fruits and vegetables. Unprocessed foods can either be sold at the market or used by a restaurant to produce processed foods. Unprocessed foods are classified as finished goods if they are set to be sold at stores without further processing.

Finished Product Examples

Finished products come in all forms. They can vary greatly and include different types of goods. Some examples of finished products include:

Merchandise

A finished good is ready for sale; however, it hasn't been sold yet. After a product has been sold, it's considered merchandise. This means that once you have decided to purchase a finished good at the store and you have checked out with it, it's no longer called a finished good. You've bought it, and now it is merchandise.

The reason for this technicality is for accounting purposes. By differentiating between finished goods that haven't sold and between merchandise, businesses can determine how much inventory they have remaining versus how much profit they've made from selling the product.

Food Products

Your food products are finished goods. You have processed foods and unprocessed foods, but both can be finished goods.

Unprocessed Foods

Your unprocessed foods are done growing and have been prepped for sale. Fruits and vegetables have been picked and cleaned and are ready for you to eat or cook. The same goes with your meats. Your meat has been cut and packaged so it's ready to be used. Your eggs have been gathered, cleaned, and packaged in cartons. You know that when you purchase these food items, the seller or farmer has done all the processing needed to make it ready to be sold. Your unprocessed foods, however, have gone through little or no changes before being considered ready to sell.

Processed Foods

When a food is processed you end up with other types of finished goods such as cereals, canned tuna ready to be eaten, chips, salsa, soda, and many other items that you find in the aisles of your grocery store.

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Video Transcript

What Are Finished Goods?

Think back to the last time you went to a store and went shopping. What did you see on the store shelves? If you went to the grocery store, you saw all kinds of fruits and vegetables, meats, and a whole lot of processed food items. If you went to a department store, you saw lots of clothes, shoes, games, electronics, and a whole bunch of other stuff. What do all these things have in common?

They're all called finished goods; these are goods or products that do not require any further processing and are ready to be sold. So, the items you see when you go shopping are finished goods. You know that when you purchase the item, it will do what you expect it to do. This is because the makers of the product are done working on it. There is no more processing that needs to be completed or changes that need to be made to the product.

Merchandise

A finished good is ready for sale; however, it hasn't been sold yet. After a product has been sold, it's considered merchandise. This means that once you have decided to purchase a finished good at the store and you have checked out with it, it's no longer called a finished good. You've bought it, and now it is merchandise.

The reason for this technicality is for accounting purposes. By differentiating between finished goods that haven't sold and between merchandise, businesses can determine how much inventory they have remaining versus how much profit they've made from selling the product.

Food Products

Your food products are finished goods. You have processed foods and unprocessed foods, but both can be finished goods.

Unprocessed Foods

Your unprocessed foods are done growing and have been prepped for sale. Fruits and vegetables have been picked and cleaned and are ready for you to eat or cook. The same goes with your meats. Your meat has been cut and packaged so it's ready to be used. Your eggs have been gathered, cleaned, and packaged in cartons. You know that when you purchase these food items, the seller or farmer has done all the processing needed to make it ready to be sold. Your unprocessed foods, however, have gone through little or no changes before being considered ready to sell.

Processed Foods

When a food is processed you end up with other types of finished goods such as cereals, canned tuna ready to be eaten, chips, salsa, soda, and many other items that you find in the aisles of your grocery store.

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Frequently Asked Questions

What are examples of finished goods?

Finished goods occur in many different types of industries and include various types of products. Some common examples of finished products include apparel that has completed its design process, food that has been cooked and is ready to be served at a restaurant, and computers that have completed production and can be sent to an electronics retailer.

What is the difference between finished and unfinished goods?

A finished good is a good that has moved through the production process and is considered complete. An unfinished good is the opposite, as it is not made available to be sold since it is deemed to be incomplete. It may be used in the production process but is not sold to consumers.

What is meant by finished goods?

Finished goods refer to the types of goods that have completed the manufacturing or production processes. These are the goods that have been created or assembled and can now be sold to customers or other businesses.

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