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Where is a manufacturer's inventory reported in the balance sheet?

Author:
Harold Averkamp, CPA, MBA

A manufacturer’s inventory will be reported in the current assets section of the balance sheet and in the notes to the financial statements. In the current assets section the amount of the manufacturer’s inventory will be positioned after cash and cash equivalents, short-term investments, and receivables.

If only the sum of the manufacturer’s inventory categories is listed in the current assets section, then the notes to the financial statements will report the detailed amounts for raw materials and supplies, work-in-process and finished goods.

The notes to the financial statements will also described how the manufacturer’s inventory is valued. For example, the notes will disclose whether FIFO lower of cost or net realizable value, LIFO, weighted average, or other cost flow methods were used. If LIFO is used, then the excess of current cost over LIFO cost is also disclosed.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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