Quick Answer: What Makes Inventory Different From Other Assets?

Inventory is usually considered a current asset, because you normally sell through inventory in a year or less.

However, inventory sits in the middle of the liquidity spectrum.

However, inventory is more liquid than long-term assets, such as property, machinery and long-term investments.

What is difference between asset and inventory?

Inventory and assets are actually very different things. Inventory is what is sold to make a profit, and assets are what help the company obtain, maintain and sell off their inventory.

Why is inventory considered an asset?

Your balance sheet lists inventory as an asset, because you spend money on it and it has value. Inventory is defined as anything that you will incorporate for future use in your business operations.

What is included in other assets?

Examples of current assets include cash and cash equivalents (CCE), marketable securities, accounts receivable, inventory, and prepaid expenses. Examples of other current assets (OCA) include: Advances paid to employees or suppliers. A piece of property that is being readied for sale. Restricted cash or investments.

What determines if an inventory account is classified as a current asset or an other asset?

The typical order in which the constituents of current assets may appear is cash (including currency, checking accounts, and petty cash), short-term investments (like liquid marketable securities), accounts receivable, inventory, supplies and prepaid expenses.