Inventories are one of the most significant assets of many enterprises; therefore，their measurement and disclosure demand careful attention.For manufacturing and retail businesses，the sale of inventory at a price greater than total cost is the primary source of income;matching inventory cost appropriately against revenue is necessary for the determination of net income.Consequently，inventories are particularly significant because they materially affect both the income statement and the balance sheet.

Inventories are asset items held for sale in the ordinary course of business or goods that will be used or consumed in the production of goods to be sold.Assets are specifically excluded from inventory because they are not normally sold in the course of business including such items as plant and equipment awaiting final disposition.