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To: Joe NYC who wrote (85263)7/17/2002 8:47:37 PM
From: qgambitRespond to of 275872
 
<<I see your point. If you value the inventory at cost, producing a chip would result in no change in inventory, only reduction in cash which was used to pay for the production cost.>>

When a chip is produced but not sold the cost of the chip is added to the inventory account.

So in a very simplified sense the accounting is:

Inventory XX (increase in inventory)
Cash XX (decrease in cash)


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