Inventory
Goods held for sale or used in production, representing a significant current asset for many businesses that must be properly valued and managed.
Inventory
Goods held for sale in the ordinary course of business, or materials used in producing goods for sale, typically classified as a current asset on the balance sheet.
For instance, a furniture retailer’s inventory might include finished furniture items in showrooms and warehouses, partially assembled items, and raw materials like wood and fabric, all valued at the lower of cost or net realizable value.
Inventory management balances having sufficient stock to meet customer demand against minimizing holding costs and obsolescence risk. Common valuation methods include FIFO, LIFO, and weighted average cost, with the selected method affecting reported gross margin and taxable income.