An accounting method that is applied as an inventory control for the practical purpose of categorizing inventory by order of importance to a business and its operations. More specifically, As or items designated with A are higher-valued items, Bs or items designated with B are lower-valued items (mid-level), and Cs or items designated with C are the lowest in terms of priority. In this particular context, priority or importance denotes attention and care by the business which are reflected in the level of control accorded to a specific category of items.

This classification is translated into ranking according to dollar volume: class A consists of items with the highest yearly volume in monetary terms, class B contains the mid-level items (items with mid-level annual dollar volume) and class C has those items with the lowest annual dollar volume.

The ABC inventory method is also known as ABC inventory classification.