Inventory change is the difference between last period's ending inventory and the current period's ending inventory. If last period's ending inventory was \$100,000 and the current period's ending inventory is \$115,000, the inventory change is an increase of \$15,000.

The inventory change is often presented as an adjustment to purchases in the calculation of the cost of goods sold. If purchases were \$300,000 during the current period and the inventory amounts are those listed above, the cost of goods sold is \$285,000. (Purchases of \$300,000 minus the \$15,000 increase in inventory. The logic is that not all \$300,000 of purchases should be matched against sales, because \$15,000 of the purchases went into inventory.) This is an alternative to the method used in introductory accounting: beginning inventory of \$100,000 + purchases of \$300,000 = \$400,000 of cost of goods available – ending inventory of \$115,000 = cost of goods sold of \$285,000.

If last period's ending inventory was \$100,000 and the current period's ending inventory is \$93,000, the inventory change is a decrease of \$7,000. Assuming purchases of \$300,000 in the current period, the cost of goods sold is \$307,000 (\$300,000 of purchases plus the \$7,000 decrease in inventory).