is ending inventory an expense, Debit or Credit?

ending inventory nature


is ending inventory an expense?

On the balance sheet, Inventory is a current asset and should be represented as such. Though it is not a separate line item on the income statement, inventory changes are included in calculating the cost of goods sold.

is ending inventory a debit or credit?

The cost of products in stock that is ready to be sold is known as merchandise inventory. It’s a current asset with a typical debit balance, meaning the debt will rise while the credit will fall.

Management needs inventory information to calculate the cost of products sold during any given accounting period. The company’s cost of products on hand at the beginning of the term must be known by management (beginning inventory)


  • purchases made during the period’s net cost
  • including inventory costs at the period’s conclusion (ending Inventory).

Management already knows the cost of the beginning Inventory since the ending Inventory for one period equals the beginning Inventory for the following period. In this period, companies keep track of purchases and discounts, returns and allowances, and transportation-in. Management needs to compute the cost of goods sold based on ending inventory costs, which they may do at the end of the quarter.

  1. Ending Inventory is Current Assets.
  2. its nature is Debit.
  3. and reported in Balance sheet

does closing inventory balance sheet?

Inventory is an asset, and its ending balance should be represented on the balance sheet as a current asset.

how to calculate ending inventory perpetual system

The inventory account in a perpetual system varies with each transaction. When a company purchases or manufactures Inventory and sells Inventory to clients, the cost of the product is deducted from the inventory account. With each transaction, the perpetual inventory software updates the inventory account. With each sale, the program deducts from the COGS account. See the sample FIFO perpetual inventory card below for an example. This product’s retail sales in this firm were $25,000 in January.

ending inventory