Wize University Introduction to Financial Accounting Textbook > Inventory
Inventory Costing Methods
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Inventory
Assets that are inventoried by a company can fall into several categories depending on the nature of the company.
Types of Inventory
Merchandising Company
- Merchandise inventory: Inventory purchased from suppliers to be resold to customers.
Manufacturing Company
- Raw materials inventory: Materials used in the production of goods.
- Work in process inventory: Goods that have been started into production but that are not completed yet.
- Finished goods inventory: Goods that have been completed and are ready to be sold.
Inventory Cost
- Based on the amount spent to acquire inventory.
- Determines Cost of Goods Sold expense account when inventory is sold.