Difference between Assets and Inventory
|S.No.||Basis of Difference||Assets||Inventory|
|1.||Meaning||Asset refers to the economic resources that are owned or controlled by an entity or business for deriving short-term and long-term future benefits.||Inventory refers to the set of finished goods (or) raw materials used for manufacturing goods to sell them in the market.|
|2.||Types||Assets are classified into two types namely- Fixed and Current assets. Fixed Assets are further classified into Tangible and Intangible Assets.||Inventory is classified into 3 types namely- Raw Materials, Work In Progress and Finished Goods.|
|3.||Period/Duration||Fixed Assets are kept in the business for a longer period whereas Current Assets are kept in business for a short period but are not meant for immediate sale.||Inventory is not kept in the business for a longer period. They are meant for immediate sales to generate revenue.|
|4.||Scope||Assets have a broad scope because they remain in the business for both long-term (Fixed Assets) and short-term (Current Assets).||Inventory has a narrow scope because they are quickly converted into revenue by selling them.|
|5.||Key features||i) Price (or) value.
ii) Generates revenue for a longer period.
iii) Maintenance cost.
iv) Highly Durable.
v) Subject to Depreciation.
|i) High liquidity
ii) Readily accessible to end-users.
iii) Contributes to working capital management.
iv) Creates seasonal demand.
v) Economies of scale.
|6.||Methods of Valuation||i) Cost Method.
ii) Base Stock Method.
iii) Fair value Method.
iv) Standard Cost Method.
|i) FIFO Method.
ii) LIFO Method.
iii) Simple Average Method.
iv) Weighted Average Method.
|7.||Examples||i) Plant and Machinery.
iii) Bills Receivables.
iv) Sundry Debtors.
v) Patents and Trademarks.
|i) Aluminium and steel for the manufacture of utensils.
ii) Flour for bakery production.
iii) Crude oil for refineries.
iv) Cotton for cloth production
|8.||Presentation||All Assets are shown in the balance sheet on the assets side as non-current and current assets.||Inventory is shown on the credit side of the trading account and under the head current assets in the balance sheet.|
>Related Long Quiz for Practice Quiz 21 – Inventory