The Calculation of Ending Inventory is an essential accounting process that helps businesses determine how much of their stock remains unsold at the end of a given period. This figure, also known as the closing inventory balance, can help inform decisions about manufacturing, purchasing and pricing.
The calculation involves adding any inventory purchased and subtracting any goods sold during the time period in question. It’s important for businesses to use accurate figures when calculating their ending inventory, as it will have an impact on their income statement and balance sheet.