Revenue, Inventory, and Cost of Sales Accounting and Reporting

Inventories include all goods obtained by a business through production or procurement. Businesses maintain inventories to ensure the smooth continuation of their operations and to meet customer needs in a timely manner. The money earned from the sale of inventories and their costs are the main factors in determining the company's operating profit. Accounting principles related to inventories define how these costs are determined and their scope.

Under BOBİ FRS, the definition and cost of inventories, measurement of inventories, recognition of inventories as expenses, calculation of cost of sales, valuation, recording, and reporting are performed. Inventories are measured at cost when they are initially recorded. The cost of inventories includes all purchase costs, conversion costs, and other costs incurred to bring the inventories to their present condition and location. Excess production costs, storage costs not necessary for the next production, general administrative expenses not contributing to bringing inventories to their location and condition, selling expenses, and interest on long-term purchases exceeding one year are not included in inventory costs. Cost measurement methods include actual cost method, standard cost method, and retail method. Cost calculation methods include actual batch cost method, FIFO, and weighted average cost method.