What is beginning inventory?
Beginning inventory is the value of the stock a business holds at the start of an accounting period. It is always equal to the ending inventory of the period before, and when that figure is missing it can be rebuilt from cost of goods sold, purchases and the closing balance.
Formula
Beginning inventory = cost of goods sold + ending inventory − purchases
Worked example
Cost of goods sold was 90,000.00 and 25,000.00 of stock remained, so 115,000.00 of goods was available in total. Purchases supplied 85,000.00 of that, so beginning inventory was 30,000.00.
How to use the beginning inventory calculator
- Enter your figures: cost of goods sold, ending inventory and purchases during the period.
- Read the result. It updates as you type, so there is no button to press.
- Try other numbers to compare scenarios. Reset brings back the example values.
Getting it right
- If you have last period’s closing figure, use that directly; it is your beginning inventory by definition.
- All three inputs must cover exactly the same period and be valued at cost.
- A result that looks too low usually means purchases include items that were not for resale.
Frequently asked questions
How do you calculate beginning inventory?
Add ending inventory to cost of goods sold, then subtract the purchases made in the period. COGS of 90,000 plus 25,000 ending, less 85,000 purchases, gives 30,000.
Is beginning inventory the same as last period’s ending inventory?
Yes. The stock you close one period with is the stock you open the next with, so the two figures are always identical.
Where does beginning inventory appear in the accounts?
It appears in the cost of goods sold calculation on the income statement, and as the inventory balance on the previous period’s balance sheet.