An asset that is held for sale, separately or as part of other assets, in the normal course of business. An entity may acquire assets for the purpose of re-selling them for profit in accordance with its business model. For example, a retailer may buy goods (usually from wholesalers) and hold them for sale. Assets held for sale include merchandise, land and property, etc.

An inventory item may also be any asset that is currently in the process of production (work in progress, WIP) and will be assigned as for sale.

Additionally, inventory may take the form of an input (materials, supplies, etc.) to the production process. By nature, inputs are consumed in the process of producing goods or rending services. For a service provider, the costs incurred in rendering the service (s) are part of inventories (though related revenue still needs to be realized and recognized later on).