WHAT IS STOCK/INVENTORY?
Stock/Inventory forms part of the operating cycle of the business. The enterprise purchases stock from the supplier in raw material form, convert it into work in progress and finally finished goods for resale to customers.
Stock/inventory is part of the Current Asset Category of the Balance Sheet.
To define stock, it is :
Inventories encompass goods purchased and held for resale including, for example, merchandise purchased by a retailer and held for resale, or land and other property held for resale.
Inventories also encompass finished goods produced, or work in progress being produced, by the entity and include materials and supplies awaiting use in the production process.
WHY HOLD STOCK?