In the realm of accounting and business management, understanding inventory and the cost of goods sold (COGS) is crucial for maintaining financial health. Inventory represents the goods available for sale and serves as a significant asset on a company’s balance sheet. Efficient inventory management ensures that a business can meet customer demand without incurring unnecessary costs. The cost of goods sold, on the other hand, encompasses the direct costs attributable to the production of goods sold by a company. It is a key component in calculating gross profit and evaluating the profitability of a company’s core operations. Mastery of these concepts allows businesses to optimize their operations and enhance financial performance.