COMM-1106EL Chapter Notes - Chapter 7: Write-Off, Internal Control, Book Value
6 Dec 2016
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Document Summary
Inventory is any item purchased by a company for resale to customers or to be used in the manufacture of a product that is then sold to customers. All companies with the exception of service businesses have inventory. Merchandisers (retailers) a company that purchases goods (inventory) from manufacturers or suppliers and sells them to customers for profit. Manufacturers companies that make products using goods (inventory) For retailers and manufacturers, inventory is often the most significant current asset (the largest asset that will be converted into cash over the next year) Managements objective for inventory is to sell it to customers at a higher price than the company purchased it for. They do not want to have too much inventory on hand as that costs money to store. Also a higher risk that it will spoil, be damaged, or become obsolete. Retailers and merchandisers buy products from many different suppliers.
