Inventory refers to the series of goods or finished goods which are utilized during production done by a company. Inventory is categorized in the balance sheet of a company as a current asset. It represents as a buffer between fulfilment of an order and manufacturing. It is critical to comprehend the inventory levels for keeping the organization informed on the additional goods, which holds substantial space and results in additional unused inventory.
In the inventory module, the key elements which are covered include as below:
- Inventory Policy
- Inventory Valuation
- Methods of Inventory analysis & review
- Strategies of Inventory reduction
- Vendor managed Inventory
An Inventory might not be immediate “sale- ready”. The items of inventory fall under one of the below three categories.
- It is kept for sale in the ordinary business course
- Products which already lies in the process of production for sale
- The supplies or materials which are required for consumption in the process of production
This classification of the asset comprises of items which are purchased and which are kept for resale. For services, Inventory can represent as a service cost, in which the revenue is not identified.
Inventory, in accounting is fragmented into 3 categories like:
- Raw Materials: This comprises of materials which must be consumed in the finished goods production
- Work in progress: It comprises of items which are kept amidst the process of production and are not in a ready state for sale to customers
- Finished Goods: It comprises of goods which are “ sale-ready” to customers. It can be categorized under “ merchandize” in retail environment, from where the items ca be bought from suppliers
Inventories basically fall under as “ short term asset”. It is because within a year, it can be liquidated.
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