Inventory T-Account is an accounting term known as a “T-shaped journal entry” that is used to track any changes in the amount of an inventory held by a company. This T-Account is made up of two columns: one records increases in the inventory balance, while the other records decreases.

The purpose of this account is to provide a complete record of additions and removals from a firm’s inventory and to ensure that the total inventory is accurately calculated. It also helps identify any potential losses or damages incurred due to mishandling or theft. The Inventory T-Account can be used to calculate the cost of goods sold, inventories on hand, purchases, sales and other related transactions. By using this method, businesses are able to maintain accurate records and manage their inventory more efficiently.