Inventory Reserve
An accounting entry that represents a deduction from earnings for the purpose of fairly and reasonably representing the value of inventoried assets on a balance sheet. The inventory reserve is used to make up for the fact that all inventory will not be sold at the cost to the firm. Investopedia Says:
An inventory reserve is a contra account on a balance sheet, and an important part of inventory accounting in GAAP. Related Terms:
Amortization
Backorder Costs
Contra Account
Depreciation
First In, First Out - FIFO
Generally Accepted Accounting Principles - GAAP
Inventory
Last In, First Out - LIFO
Net Realizable Value - NRV
Periodic Inventory |