Direct materials inventory definition
/What is Direct Materials Inventory?
Direct materials inventory is the total amount of components on hand that have not yet been included in products. This is one of the three main classifications of inventory; the other two classifications are work-in-process inventory and finished goods inventory. The ending value of direct materials inventory may be stated in a separate line item on an entity's balance sheet, or it may be aggregated into a single inventory line item with the other two inventory classifications.
The stock of direct materials inventory should be reviewed periodically for obsolescence. If any of these items are found to be obsolete, then they should be written down to their disposal value at once.
Terms Similar to Direct Materials Inventory
Direct materials inventory is also known as raw materials inventory.