Basic Accounting Knowledge: Inventory

Inventory related subjects

The "inventory" items in accounting statements include a series of accounting subjects, including "material purchase", "material in pit", "raw material cost", "material cost difference", "inventory commodity", "goods issued", "price difference between goods sold and sold", "commissioned processing materials", "turnover materials", "consumptive biological assets", "precious metals", "debt paying assets", "damaged goods and materials", "financial leasing assets", "inventory depreciation preparation" and other subjects.

Inventory related specialties

Inventory shortage cost: loss caused by shortage of stock, including

Economic lot size: the quantity of stock that can bring the total cost of stock to the lowest point in a certain period.

Inventory purchase cost: including purchase price, related taxes, pportation charges, loading and unloading fees, insurance premiums and other expenses attributable to purchase cost of inventory.

Profit and loss critical point: also known as profit and loss bifurcation points, break even points, two leveling points, etc., refers to the scale of enterprises (Sales) just to make the enterprise reach a state of incapability.

Opportunity cost: refers to the use of one resource or putting it into a specific purpose when faced with multiple choices.

(Note: stock shortage cost, economic volume, profit and loss critical point and opportunity cost described in this paper belong to the category of management accounting).