Is the inventory is a current assets or non-current assets ?

First we should consider what is included in Inventories- Inventories means asset held for sale in the ordinary course of business (Finished goods),Work in process and materials  and supplies  that are consumed in production (Raw material).

It depends on nature of business that how quickly it can be sold/ realised (Inventory turnover ratio). However the purpose of inventory is to generate cash or cash   equilient- it is classified as current assets. It is valued at cost or net realisable value (NRV)- whichever is less.

The inventory which is also known as stock is our current asset

if all conditions indicates that the inventory will be sold in the next operating period the inventory classfied under current assets 

inventory comes under current asset

Inventory is a Current Assets.... A current assets is an asset held in the course of normal trade and which is realisable in the next 12 months from the end of the reporting period. Since the Inventory is meant to be realised by way of sale or consumption in the course of generating sales, it is treated as a current asset. 

it is usually a current assets

Inventory is under current Assets ----------------Answer

Hello Team,

Assets are resources a company owns. They consist of both current and noncurrent resources. Current assets are ones the company expects to convert to cash or use in the business within one year of the balance sheet date. Noncurrent assets are ones the company reckons it will hold for at least one year.

Examples of current assets are cash, accounts receivable, and inventory.

·         Cash: Cash includes accounts such as the company’s operating checking account, which the business uses to receive customer payments and pay business expenses, or an imprest account, which keeps a fixed amount of cash in it (such as petty cash).

·         Accounts receivable: This account shows all money customers owe to a business for a completed sales transaction. For example, Business A sells merchandise to Business B with the agreement that B pay for the merchandise within 30 business days.

·         Inventory: Goods available for sale reflect on a merchandiser’s balance sheet in this account. A merchandiser is a retail business, like your neighborhood grocery store, that sells to the general public. For a manufacturing company, a business that makes the items merchandisers sell, this category also includes the raw materials used to make items.

·         Prepaid expenses: Prepaids are any expense the business pays for in advance, such as rent, insurance, office supplies, postage, travel expense, or advances to employees. They also list as current assets, as long as the company envisions receiving the benefit of the prepaid items within 12 months of the balance sheet date.

Long-term assets are ones the company reckons it will hold for at least one year. Typical examples of long-term assets are investments and property, plant, and equipment currently in use by the company in day-to-day operations.

·         Fixed assets: This category is the company’s property, plant, and equipment. The account includes long-lived assets, such as a car, land, buildings, office equipment, and computers.

·         Long-term investments: These investments are assets held by the company, such as bonds, stocks, or notes.

·         Intangible assets: These assets lack a physical presence (you can’t touch or feel them). Patents, trademarks, and goodwill classify as noncurrent assets.

Regards,

Saiyid