The total cost of goods available for sale is a combination of the beginning inventory plus new inventory purchases. These costs relating to goods available for sale are included in the ending inventory, reported on the balance sheet, or become part of the cost of goods sold reported on the income statement

Merchandise inventory is maintained using either the periodic or the perpetual updating system. There are four basic inventory cost flow allocation methods, which are alternative ways to estimate the cost of the units that are sold and the value of the ending inventory.

periodic inventory system — system that is updated at the end of the period, to match the physical count of goods on hand. goods available for sale — total of all inventory (beginning inventory plus purchased inventory); will either be sold this period or held in period-end inventory. purchases — new acquisitions of merchandise inventory during the period. merchandise inventory — goods held for sale at a given point in the period.