The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Inventory is income?||Date: 9/25/2012 1:35 PM|
|Author: ptheland||Number: 116667 of 121426|
The dollar value of unsold inventory does not increase income? Am I that far off base?
You're not far off on a bottom-line basis. But I don't like the explanation you used, as I think it leads to confusion rather than clarification.
I wouldn't say that unsold inventory increases income. It only increases income if you start from the incorrect position of having claimed your purchases as an expense. You never should have used unsold inventory to decrease income in the first place.
Technically, I'd call ending inventory a deferred expense. It will be an expense in the future, but it's not an expense yet.
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