posted on 06-06-2019

Beginning Inventory

Updated October 1, 2019

What is Beginning Inventory?

Beginning inventory refers to the value of goods that a company has for its use or sale at the start of an inventory accounting period.

How Does Beginning Inventory Work?

Say Company XYZ produces 5,000 units during the course of a year and sells 2,000 units. The following year, Company XYZ will have a beginning inventory of 3,000 units.

Why Does Beginning Inventory Matter?

Beginning inventory is an important indicator of what a company will be ordering for the upcoming year. It can also be used to project coming costs for a company to ramp up production or coming revenues for its suppliers.