Finished goods inventory definition. Analyzing the definition of key terms often provides more insight about concepts. Finished goods inventory can be defined as – Account that controls the finished goods files, which acts as a subsidiary ledger (of the inventory account) in which the costs of finished goods that are ready for sale are recorded. Finished goods inventory is an inventory account, an inventory account needed for a manufacturing company to help categorize the stages of inventory. The stages of inventory for a manufacturing company generally start with raw materials that moves to work in process and is then moved to finished goods one complete. Finished goods inventory is similar to the inventory account for a merchandising company because this is the inventory ready for sale. Once sold we can record cost of goods sold as the expense account related to inventory and the reduction of finished goods inventory.
