Inventory Accounting
The body of accounting that deals with valuing and accounting for changes in inventoried assets. Changes in value can occur for a number of reasons including depreciation, deterioration, obsolescence, change in customer taste, increased demand, decreased market supply and so on. Investopedia Says:
It is a requirement of GAAP that inventory be properly accounted for according to a very particular set of standards, so as to limit the potential of overstating profit by understating inventory value, and to limit the potential to overstate a company's value by overstating the value of inventory which has in fact materially depreciated in value. Related Terms:
Amortization
Carrying Value
Depreciation
First In, Still Here - FISH
Generally Accepted Accounting Principles - GAAP
Inventory Reserve
Lower of Cost and Market Method
Net Asset Value - NAV
Net Realizable Value - NRV
Periodic Inventory |