Can you explain how inventory entries are reflected in the balance sheet and income statement of a company?

Step 1 : Balance Sheet:
The balance sheet provides a snapshot of a company's financial position at a specific point in time. Inventory is considered a current asset, and its value is reported on the balance sheet under the "Assets" section.
Step2: Inventory Valuation: The value of inventory is determined based on the cost method used by the company (FIFO, LIFO, weighted average, etc.). The inventory value reflects the cost of the goods held for sale or production at the reporting date.
Step 3 : Income Statement:
The income statement, also known as the profit and loss (P&L) statement, shows a company's financial performance over a specific period. Inventory entries impact the income statement in several ways:
Step 4 : Cost of Goods Sold (COGS): The cost of goods sold represents the direct costs of producing or purchasing the goods that a company sells during the period. The COGS is calculated by deducting the ending inventory value from the sum of the opening inventory and purchases during the period.
Step 5 : Gross Profit: Gross profit is calculated by subtracting COGS from total sales revenue. It represents the profit made from the direct production or purchase of goods before deducting other operating expenses.
Step 6 : Operating Profit: Operating profit is derived by subtracting operating expenses (such as selling, general, and administrative expenses) from gross profit. Inventory entries indirectly impact operating profit by influencing COGS.
Step 7 : Net Profit: Net profit is the final result after deducting all operating and non-operating expenses, taxes, and interest from operating profit. Inventory entries play a role in the final calculation of net profit by affecting gross profit and operating profit.