Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Inventory Errors

Financial Accounting

5. Inventory

Inventory Errors

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Multiple Choice

Inventory is a(n) ______ of goods.

expense

asset

revenue

liability

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Verified step by step guidance

Understand the concept of inventory in financial accounting. Inventory refers to goods that a company holds for sale in the ordinary course of business or materials used in production.

Classify inventory as part of the company's resources. Inventory is considered an asset because it represents economic value that the company owns and expects to convert into cash or other benefits.

Differentiate inventory from other financial categories such as expenses, revenues, and liabilities. Expenses are costs incurred during operations, revenues are earnings from sales, and liabilities are obligations owed to others.

Recognize that inventory is recorded on the balance sheet under current assets, as it is expected to be sold or used within a year.

Conclude that inventory is an asset because it contributes to the company's ability to generate revenue and is a resource owned by the company.