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Iii) An asset which is in process but is meant for sale in the market Ii) An asset that can be realized for revenue generation or has a value for exchange, or If we break down all the definitions, we can see that there are certain similarities: Meaning of inventory: Breaking down the definitions In the hotel industry, a vacant room is inventory for the owner. In a service industry, since there is no exchange of physical stock, the inventory is mostly intangible in nature. So the service industry inventory mostly includes the steps involved before completing a sale.Įxample: For a research consultancy firm, inventory consists of all the information collected for a project. In a manufacturing business, inventory is not only the final product manufactured and ready to sell, but also the raw materials used in production and the semi-finished goods in the warehouse or on the factory floor.Įxample: For a cookie manufacturer, inventory will include the packets of cookies that are ready to sell, the semi-finished stock of cookies that haven’t been cooled or packed yet, the cookies set aside for quality checking, and raw materials like sugar, milk, and flour.
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Inventory refers to all the items, goods, merchandise, and materials held by a business for selling in the market to earn a profit.Įxample: If a newspaper vendor uses a vehicle to deliver newspapers to the customers, only the newspaper will be considered inventory. Here’s a small list of definitions: Most common definition The definition of inventory changes slightly depending on the industry.