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average inventory

(Dictionary)

Author:
Harold Averkamp, CPA, MBA

Definition

The average amount of inventory during a period of time. Since the amount reported in the Inventory account is the ending balance on one specific day, it is necessary to compute an average balance when relating this account to the cost of goods sold (which covers a period of time).

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  • Debits and Credits
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  • Accounts Receivable and Bad Debts Expense
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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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