What is inventories?

In business operations, what needs to be recorded in the accounting as it is information that is important to the business is the inventories in order to be used in valuation for the performance of the business.

inventories or inventory Refers to current assets in accounting and tax purposes. In which this inventories will affect the business operations, that is, intended for production or distribution. As a result, inventory management is considered as liquidity management of various businesses, whether manufacturing business, trading business. and service business But if to be interpreted according to the accounting standards, it means trade that has the characteristics of one of these items:

- Available for sale according to the general operation of the business

- It is a product that is in production to be in the form of a finished product for sale.

- It is a product that is still raw material or material.

These inventories must be valued at cost or net price. depending on which value is less In the valuation of inventories under Section 65 Bis (6) of the Revenue Code It has determined that the valuation of inventories at the end of the period must be the price of inventories on the last day of the accounting period. There are four methods used to calculate inventories as follows:

- Calculation with first in, first out

- Calculation with weighted average method

- Calculation with the last-in, first-out method

- Calculation with specific price method

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