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Is the cost of producing unsold inventory reported on a profit and?

The cost of inventory only appears on the income statement when it is sold. It is commonly referred to as cost of goods sold or cost of sales. Inventory on hand remains your property and is considered an asset, a current asset to be more precise. You may have several categories of inventory, which differentiate what stage they are at. Your general ledger accounts, assuming you are a manufacturing enterprise might look like: Inventory - Raw Materials Inventory - Work in Process Inventory - Finished Good The key determination between whether it belongs on your balance sheet or on your income statement is ownership or title. If title has passed from buyer to seller, it is no longer considered an asset and, as such, belongs on your income statement.

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