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Karla
Karla , Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 141
Experience:  15 years experience in business as both accounting and auditing management
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What impact does an organizations inventory have on its financial

Resolved Question:

What impact does an organizations inventory have on its financial statements, especially the balance sheet and the income statement
Submitted: 5 years ago.
Category: Finance
Expert:  Karla replied 5 years ago.

Karla :

Good evening and thank you for using Just Answer

Karla :

Inventory is an asset to an organization

Karla :

in a retail company, the inventory would be made up of items held for resale

Karla :

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.

Karla :

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.

Karla :

If there is anything else I can help you with, please let me know, otherwise, please accept my answer.

Karla and 2 other Finance Specialists are ready to help you
Expert:  Karla replied 5 years ago.
Please let me know if you need any additional information.