What are Finished Goods?
Finished goods are products that have passed or completed the manufacturing process, but are not yet sold or distributed to the final consumer. When the product gets to the end users, the processing of goods is then at the final stage.
While finished goods are final products of one company, the goods may be components or raw materials to another. In essence, the components are used to further the production of different products.
A classical example is a business transaction between a computer chip manufacturer and computer manufacturer. The chip is a finished product to the manufacturer, but it becomes a component when sold to the computer manufacturer.