What is inventory in a small business context?

• A. The goods a business has for sale
• B. The money owed to suppliers
• C. The tools used to run a business
• D. The employees hired

Answer: (D)

Inventory is the goods a business has for sale, including finished products and, in some cases, raw materials or parts kept on hand for production. In a small business, these items are considered assets because they can be turned into cash when sold. Good inventory management helps prevent stockouts that turn customers away and avoids overstock that ties up cash and requires storage. The other options describe money owed to suppliers, equipment, or employees—things that aren’t inventory.