Chapter 1 – Inventory

Chapter 1.1 – What is Inventory

Inventory is one of the most important assets of a business because it is a primary source of revenue and earnings for shareholders.

1) What is Inventory?

Inventory, which consists of raw materials, works-in-progress, and finished goods, is an asset to the company.

2) Breaking Down of Inventory

The cost of goods sold in an accounting period is calculated by using this formula: Beginning Inventory + Purchases – Ending Inventory = Cost of Goods Sold.

Thus, the cost of goods sold is primarily determined by the cost assigned to ending inventory.

3) Example of Cost of Goods Sold According to AutoCount Profit & Loss

4) Example of Closing Stock According to AutoCount Balance Sheet