Inventory is goods held for sale (finished goods), in production (work-in-progress), or used in production (raw materials). Reported as a current asset on the balance sheet, valued at the lower of cost or market. Costing methods affect reported profits and taxes: FIFO (First In First Out) — older costs flow to COGS; LIFO (Last In First Out) — newer costs flow to COGS (IRS-permitted in US; rising prices = higher COGS = lower taxes); Weighted Average. Inventory Turnover (COGS/Average Inventory) measures efficiency. Slow inventory ties up cash, increases storage and obsolescence costs. Modern just-in-time inventory management minimizes carrying costs.
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Accounts Payable
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Accounts Receivable
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Accrual Accounting
Accrual accounting recognizes revenues when earned (regardless of cash receipt) and expenses when incurred (regardless of cash payment)…
Accrued Expense
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Amortization
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Audit
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Inventory
August 22, 2026 · Aditya Gupta
Accounting
Related terms
Accounts Payable
Accounts Payable (A/P) is money a company owes to suppliers for goods or services received but not yet…
Accounts Receivable
Accounts Receivable (A/R) is money owed to a company by customers for goods or services delivered on credit.…
Accrual Accounting
Accrual accounting recognizes revenues when earned (regardless of cash receipt) and expenses when incurred (regardless of cash payment)…
Accrued Expense
An accrued expense is a cost recognized in the income statement before cash is paid — recorded as…
Amortization
Amortization is the systematic allocation of intangible asset cost over its useful life — analogous to depreciation but…
Audit
An audit is an independent examination of a company's financial records, internal controls, and statements — typically conducted…
