Anonymous

Why Are Changes In Inventories Included As Part Of Investment Spending?

1 Answers

Anonymous Profile
Anonymous answered
Anything produced by business that has not been sold during
the accounting period is something in which business has invested—even if the
“investment” is involuntary, as often is the case with inventories.  But all inventories in the hands of business
are expected eventually to be used by business—for instance, a pile of bricks
for extending a factory building—or to be sold—for instance, a can of beans on
the supermarket shelf.  In the hands of
business both the bricks and the beans are equally assets to the business,
something in which business has invested.

Answer Question

Anonymous