![]() ![]() Now it turns into an expense as it is applied to a cost of goods sold account. The value of the inventory is in its potential sale. You are buying/creating an asset, so it should be shown on your balance sheet as such in an inventory asset account. You’d be surprised to know that many people think inventory is simply an expense, because they are purchasing it for resale. The easiest way to start understanding how inventory applies to your business, accounting wise, is to understand where it is in relation to its production, sale and after it is sold. ![]() So where do you start and how should you do it? Let us enlighten you a bit, so you, the aspiring entrepreneur, can get a handle on the accounting side of inventory and cost of goods sold. So many factors need to be considered when accounting for inventory. Those finished products have to sit and wait somewhere until they get sold, get in the hands of people to try and promote them, and sometimes they get broken, spoiled or stolen (all with costs associated). The small business dreamer will start to get bogged down almost immediately when all of the little pieces that turn into that product need to be tracked and have a cost associated with it. ![]() It seems simple - figure out a cool product to sell, find all the bits and pieces needed to create the product, sell it and live happily ever after in the business world. It’s no secret that inventory is complicated and dynamic for the inventory entrepreneur. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |