MEANING OF INVENTORY
Inventories are unconsumed or unsold goods purchasecior manufactured. According to the International Accounting Standard: 2 (lAS: 2), inventories are tangible froperty.
(a) held for sale in the ordinary course of business,
(b) in the process of production for such sale, or
(c) to be consumed in the production of goods or services for sale.
Thus, the term inventory includes stock of (i) finished goods, (ii) work in-progress and (iii) raw matcrials and components. In case of a trading concern inventory primarily consists of finished goods while in case of a manufacturing concern, inventory consists of raw materials, components, stores, work-in-process and finished goods.