Inventory or stock is a short term business asset of ‘stocks of goods’.
In accounting terms these balances do the following;
allow for the resale or trading or for using them to make, manufacture or produce a product for sale.
This infographic shows how inventory is reported on the Income Statement.
There are several methods of valuation for the business accounting records. Some of these are First In First Out (FIFO), weighted average, and being able to specifically identify and value inventory items.
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