Setting up Account for Raw Materials

[Allirav]

Is raw materials considered Cost of Goods Sold, or an Inventory Asset?

For example, my business involves making custom baby blankets. We buy thread, fabric, etc.

[zafar]

Yes,it is included in cost of goods sold in
case of manufacturing company.
i.e

Raw material xxx
Direct Labour xxx
=====
Prime Cost xxxxx
=====

Prime cost is added in OHs to calculate
total cost of manufacturing companies.