Business, Legal & Accounting Glossary

Definition: Inventory

Quick Summary of Inventory

Stocks of goods held for manufacture or for resale.

What is the dictionary definition of Inventory?

Dictionary Definition

  1. operations The stock of an item on hand at a particular location or business
  2. operations a detailed list of all of the items on hand
  3. operations the process of producing or updating such a list

Full Definition of Inventory

  1. An itemised catalogue or list of tangible goods or property, or the intangible attributes or qualities.
  2. The value of materials and goods held by an organisation (1) to support production (raw materials, subassemblies, work in process), (2) for support activities (repair, maintenance, consumables), or (3) for sale or customer service (merchandise, finished goods, spare parts).

Inventory is often the largest item in the current assets category and must be accurately counted and valued at the end of each accounting period to determine a company’s profit or loss. Organisations whose inventory items have a large unit cost generally keep a day to day record of changes in inventory (called perpetual inventory method) to ensure accurate and on-going control.

Organisations with inventory items of small unit cost generally update their inventory records at the end of an accounting period or when financial statements are prepared (called periodic inventory method). The value of an inventory depends on the valuation method used, such as first-in, first-out (FIFO) method or last-in, first-out (LIFO) method. GAAP requires that inventory should be valued on the basis of either its cost price or its current market price whichever is lower of the two to prevent overstating of assets and earning due to sharp increase in the inventory’s value in inflationary periods. The optimum level of inventory for an organization is determined by inventory analysis. Called also stock in trade, or just stock.

Synonyms For Inventory

stock, list, store, record, register

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Inventory. Payroll & Accounting Heaven Ltd. August 06, 2021
Chicago Manual of Style (CMS):
Inventory. Payroll & Accounting Heaven Ltd. (accessed: August 06, 2021).
American Psychological Association (APA):
Inventory. Retrieved August 06, 2021, from website:

Definition Sources

Definitions for Inventory are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 7th January, 2020 | 118 Views.