I'm trying to understand the very basics of accounting for inventory. I've been reading a good bit online, but I'm not making sense of what I want
I have a small business where I purchase used items and resell them at a profit. All the items are unique, and are purchased for and sold for unique values.
I understand that my current inventory is a business asset. What I don't understand is the "accounts" I use when I buy a new item and want to add it to that asset, or when I sell an item, and need to remove it. The purchase price is an expense to the business, but is generally way less than the value of the item in inventory (it's sale price). How do these things balance? Do I have to have some sort of "Value Added" account to balance this difference? What does it balance against?
I know myself well enough that I'm probably making this a lot harder than it really is, but I'm not getting it. Can anyone help me understand this?
Thanks and Regards, Max