What kind of inventory includes raw materials and goods in processing?

Work-in-process (WIP) inventory is the correct choice because it encompasses items that are currently being manufactured or are in the midst of the production process. This category includes raw materials that have been issued to the production area but are not yet completed products. WIP reflects the cost of the materials, labor, and overhead that have been incurred for products that are in the production stages.

In contrast, finished goods refer to items that have completed the manufacturing process and are ready for sale, which does not align with the question's focus on raw materials and goods currently being processed. Excess inventory represents surplus stock that is not needed immediately and doesn't capture the active production phase. Active stock is a broader term that might include any inventory that is currently in use or available, but it lacks the specific implication of the production sequence that WIP conveys. Thus, WIP is uniquely defined by its role in the manufacturing process and includes both raw materials and partially completed products.