What is Inventory? Meaning Definition Examples

square Meaning of Inventory


Let's find out, What is inventory?

  1. Inventory is the stock of goods held for doing business.
  2. It is usually required to carry on the business and its allied activities.

Important points covering the meaning of inventory is depicted below.

meaning of inventory

The meaning of inventory mainly revolves around following four items:

  1. Raw-materials required for production process.
  2. Work in progress (WIP). For example, semi-finished goods.
  3. Captive consumable goods are goods produced and used by producer.
  4. Finished goods which are available for sale.

Inventory also includes investment made in raw-materials and their parts in accordance with the inventory policy established by the management.


square Definition of Inventory


Inventory can be defined in many ways w.r.t different prespectives. Following selected statements will help you to get a broad understanding of its concept.

definition of inventory

In general, the simple definition of inventory can be stated as follows.

“Inventory means the stock of goods available or held for sale in the ordinary course of business.”

In a business sense, the inventory can be defined as under.

“Inventory includes raw-materials stored in a warehouse, work-in-progress in production, and finished goods available for sale.”

From an academic or learning perspective,

“Inventory is that stock of goods, which have a demand and supply in the market and can be easily realized in cash.”

square Examples of Inventory


The examples of inventory of some major industries are depicted below.

examples of inventory

Following are examples of inventory seen in four major industries:

  1. Automobile industry's inventory comprises of the total number of cars and their spare parts.
  2. Consumable goods' inventory contains packets of wheat flour, cans of edible oil, etc.
  3. Electronic goods' inventory includes televisions, computers, mobile phones, air-conditioners, refrigerators, etc.
  4. Construction industry's inventory mainly covers residential flats and commercial shops.






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