The Merchandise Inventory account on a classified balance sheet is reported in the current assets section. This section is for assets expected to be converted into cash or consumed within a year or operating cycle.
The Merchandise Inventory account on a classified balance sheet is reported in the current assets section. This section includes assets that are expected to be converted into cash or used up within one year or one operating cycle, whichever is longer. As inventories consist of goods that a business has produced but not yet sold, they qualify as current assets. Inventory levels can fluctuate based on business performance, increasing when sales are lower than expected and decreasing when sales exceed expectations.
because inventories are expected to be sold within a short period and are actively used in the operations of a business, they are classified as current assets on the balance sheet.