TT2017
New Member

Inventory Cost = Profit?

When purchasing inventory for resale, I know that counts as an expense for the business but let's say we bought 100 units for $10 each = $1000 of inventory. But by the end of the year, we only sold 50% of that so we are left with 50 units/$500 of inventory. If our business profited $10,000 and had the 50 units/$500 of inventory, would we have to report the 50 units/$500 as profit, so we made $10,500?

Or when purchasing inventory for resale, does the remaining inventory at the end of the year count just as an expense until it's sold? So we would just report we profited $10,000 and just keep the 50 units/$500 for next year(not get taxed on the leftover inventory)?