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What section of the financial statement does this inventory appear?

What section of the financial statement does this inventory appear?

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Answer #1

Inventory or Changes in inventory may appear at two places in financial statements. The same is discussed below:-

Inventory is an aset and the same should be reported under the assets side of the balance sheet.

Again, inventory is held for short term purpose (less than a year) with a view to sell or convert the unfinished inventory into marketable product and sell the same. Hence, inventory should be reported under 'Current Assets' in the assets side of the balance sheet, since inventory is held with a short term view and the same inventory is not permanently invested in business.

Also, if we have any changes in inventory (increase/decrease in inventory as compared to last statement), the same is taken into account in the calculation of cost of goods sold (part of income statement).

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