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Accounting & Tax vocabulary · Assets, Liabilities & Equity

Inventory

Meaning in accounting & tax, with examples

/ˈɪnvəntɔːri/nounCore term

In accounting & tax, inventory means: Goods a business holds to sell, plus the raw materials and unfinished products used to make them. It is a current asset on the balance sheet.

In Turkish: stoklar, stok, envanter

How it is used

Called stock in British English. Companies count inventory (a stock count or stocktake), value it with methods such as FIFO or weighted average, and write down obsolete or damaged items.

Example sentences

  1. We do a full inventory count on the last day of the year.

  2. Inventory is building up in the warehouse because sales are slower than planned.

Common collocations

  • inventory count
  • inventory valuation
  • write down inventory
  • inventory turnover
  • raw materials inventory
  • cost of goods soldThe direct cost of the products a company sold in a period, such as purchase price, materials and production labour. It is deducted from revenue to find gross profit.
  • current assetAn asset that is expected to be turned into cash, sold or used up within one year, such as cash, receivables, inventory and prepaid expenses.
  • impairmentA fall in the value of an asset below the amount shown in the books, recorded as a loss so that the asset is not overstated.
  • write offTo remove an asset, such as an unpaid receivable or damaged stock, from the books because it no longer has value, recording the loss as an expense.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Assets, Liabilities & Equity

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This page explains English vocabulary for learners. It is not financial advice.