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Inventory is an asset to an organization
in a retail company, the inventory would be made up of items held for resale
when an item is sold, the entry is to record a credit to income (income statement) and a debit to cash or accounts receivable (balance sheet), then a credit is recorded to inventory to reduce the balance sheet account and a debit is recorded to cost of goods sold.
To record inventory when it is purchased, a debit to Inventory (balance sheet) is recorded that is offset by a credit to either cash or accounts payable.
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