Inventory
Categories: Accounting
Think: raw, uncooked materials to make the things companies...make. Inventory comprises “raw materials,” “work-in-progress,” and “finished goods,” which all can be considered (and counted as) inventory as goods are being produced from start to finish.
Well, it’s just stuff you have for sale...in one form or another. An auto dealer? All those cars she has sitting out there in the sun as dive-bombing targets for the birds? Yep, they’re inventory to the car dealership.
The loads of nose hair trimmers sitting on the shelves at The Well Appointed Nostril? Yep, they’re inventory, albeit gross-ish inventory, especially after use.
The 4,000 yards of denim cloth sitting in the weaving factory waiting for 13-year-old girls in Thailand to weave it all together to make Levi’s for The Gap? Yep, that cloth is inventory. It isn’t finished inventory. It’s not yet ready for prime time, but it’s an asset for the company who owns it, and is held as inventory, or work in process, on that side of the balance sheet.
And when it’s sold and turned into revenues, it’ll just become part of the expenses line on the income statement, usually as COGS, or cost of goods sold.
The inventory is a good. But inventory is always good, of course, as many a customer has learned after taking a hefty shock straight to the honker.
Related or Semi-related Video
Finance: What is inventory?2 Views
Finance allah shmoop What is inventory Well it's Just stuff
you have for sale in one form or another An
auto dealer Well all those cars she has sitting out
there in the sun is a dive bombing targets for
the birds Yeah while their inventory to the car dealership
the cars are inventory the loads of nose hair trimmers
sitting on the shelves at the well appointed nostril fine
store best nostril trimming store in the world Yet their
inventory albeit kind of gross ish inventory especially after use
the four thousand yards of denim cloth sitting in the
weaving factory waiting for thirteen year old girls in thailand
toe weave it all together to make levi's for the
gap Yep that cloth is inventory It isn't finished inventory
It's just a work in process not yet ready for
prime time or a prime thigh or whatever But it's
an asset for the company who owns it and it
is held as inventory on the balance sheet Work in
process right there at the balance sheet right there Okay
And when that inventory is sold and turned into revenues
it'll just become part of the expenses line on the
income statement usually has cost of goods sold or caw
Gse that's What people in the accounting bids say Cocks
thie Inventory is a good but inventory is always good
Of course as many a customer has learned after taking
a hefty shock straight to the hunger And that hurts