What is Inventory?

Inventory refers to all the goods a business holds with the intention of selling them to generate revenue. This includes:

  • Raw materials: The basic components used in manufacturing.
  • Work-in-progress: Partially finished goods still in production.
  • Finished goods: Products ready for sale.

Is Inventory a Current Asset?

Yes, Inventory is indeed a current asset. Let’s understand why inventory is a current asset.

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Exceptions to the Rule

While inventory is generally considered a current asset, there are some exceptions. For example, in industries with longer production cycles, like shipbuilding or large-scale construction, inventory may take longer than a year to sell. In these cases, a portion of the inventory might be classified as a non-current asset....