Definition of Ending inventory:
Ending inventory is the value of goods still available for sale and held by a company at the end of an accounting period. The dollar amount of ending inventory can be calculated using multiple valuation methods. Although the physical number of units in ending inventory is the same under any method, the dollar value of ending inventory is affected by the inventory valuation method chosen by management.
Remaining inventory that is available for purchase after the account period has ended.
At its most basic level, ending inventory can be calculated by adding new purchases to beginning inventory, then subtracting the cost of goods sold (COGS). A physical count of inventory can lead to more accurate ending inventory. But for larger businesses, this is often unpractical. Advancements in inventory management software, RFID systems, and other technologies leveraging connected devices and platforms can ease the inventory count challenge.
How to use Ending inventory in a sentence?
- Ending inventory is an important component in the calculation of cost of goods sold.
- The method chosen to assign a dollar value to inventory and COGS impacts values on both the income statement and balance sheet.
- There are three common valuation methods for inventory: FIFO (first in, first out), LIFO (last in, first out), and weighted-average cost.
Meaning of Ending inventory & Ending inventory Definition