What does inventory refer to in tax terminology?

In tax terminology, inventory specifically refers to items that the taxpayer buys or makes for resale. This definition is crucial because inventory is considered a current asset on a business's balance sheet and plays a significant role in calculating cost of goods sold (COGS).

When a business acquires goods to sell, whether through purchase or manufacturing, those items are classified as inventory until they are sold. This classification impacts the business's financial statements, tax liability, and overall profitability. By accurately tracking inventory, businesses can ensure they account for the cost of goods sold and manage their cash flow effectively.

The other options encompass various aspects of goods and assets but do not accurately reflect the specific definition of inventory in the context of taxation. Personal goods are not related to business operations, raw materials may be part of the production process but are not finished goods intended for resale, and general assets used in business operations do not solely define inventory. Therefore, the understanding of inventory as goods intended for resale is essential for proper financial and tax reporting.