Inventory

Inventory consists of goods held for sale, in production, or materials to be used in production.

Inventory is measured at the lower of cost and net realizable value, and cost may be determined using methods such as FIFO or weighted average.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **Inventory** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.