Definition of Inventory | Raw Materials and Finish Products on Hand

Accounting Definitions

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Inventory Definition

Inventory is the list of raw materials and/or finished products that a business has on hand for manufacture or sale.

Inventory Extended Definition
Small business owners need a method for keeping track of their inventory for many reasons. Too much inventory can hurt cash flow or result in losses due to outdated stock. Too little inventory can result in lost sales when a customer cannot purchase a desired item. Equally important is the need to track inventory to satisfy the Internal Revenue Service (IRS) requirements.

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Last Updated By

Jenna Hutkowski | Apr 12, 2023

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