Inventory of materials and goods;

#Inventory of materials and goods;

Inventory of goods and materials refers to those tangible assets belonging to the company that are kept for sale in the normal course of the company’s activities or are used in the production of goods and services for this purpose.

In simpler terms, inventory includes both goods that are kept for sale and goods that are used in the production of other products or services.

Inventories of goods and materials form an important part of the assets of economic enterprises and are of great importance. Also, the inventory of materials and goods is considered one of the company’s current assets. Because it is expected to be sold or consumed within a fiscal year or during an operating cycle.

The inventory of materials and goods includes:

– It is kept for sale in the normal course of business operations.

– It is placed in the production process in order to make a product or provide a service.

– It is purchased and maintained in order to make a product or provide a service.

– It has a consumption nature and is used indirectly for the business unit’s activity.

Types of inventory of goods and materials

Consumables

Consumables are items that are consumed during the company’s activity and in the administrative, sales or service areas. Consumables are often not used in the production of products. Sometimes these requirements are also called administrative requirements.

Raw materials or raw materials

Raw materials are materials that are used as ingredients for other products. Raw materials are usually kept by manufacturing companies in order to produce various products. For example, cotton is the primary material in fabric production.

Product under construction

A product in the process of manufacturing or under production refers to those materials and inventory that are in the process of being produced, in the sense that they are still being produced and some of them have been completed, but they are in the final stage of the process. They have not been produced.

Goods ready for sale or manufactured goods

Manufactured goods are the inventory of goods that are created after the completion of the production process. Manufactured products are actually products that are ready for sale.

In more detail, the inventory can be classified as follows:

A) Merchandise inventory in commercial units: In commercial units, whether retail or wholesale, merchandise inventories include items that are purchased for sale in the same initial form, such as necessary inventory.

b) Availability of goods in production units:

1- Raw materials: Raw materials include tangible items that are directly obtained from natural resources or that are purchased from sellers and are used for direct consumption in the production of products.

2- Goods in the process of construction: It refers to the inventory whose process is not completed.

3- Manufactured goods: It is said that the inventories have gone through the production process completely and are ready for sale.

4- Necessities (indirect materials): It is similar to raw materials, but it is difficult to identify their relationship with the manufactured goods and it indirectly plays a role in the production of products. For example: oil and grease for machinery are classified under the title of other inventories in financial statements.
Mehdi Koh Soltani (financial services, accounting, financial and tax consultant):
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