Question

Why Does Inventory Get Reported on Some Income Statements?

Answer 1

It is an asset and its ending balance should be reported as a current asset on a company's balance sheet. Inventory is not an income statement account. However, the change in Inventory is a component in the calculation of the Cost of Goods Sold. (Cost of Goods Sold is considered to be an expense and is subtracted from Sales on a merchandising company's income statement.) Some income statements will show the calculation of Cost of Goods Sold as Beginning Inventory + Net Purchases = Goods Available - Ending Inventory. In that situation the beginning and ending inventory does appear on the income statement.

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