Inventory
What is Inventory in Accounting?
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. Common ones are First In First Out (FIFO) and weighted average. If the inventory item is large or valuable it may be able to specifically identified to value the inventory items.
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