The selection of a method of inventory costing is important because it will affect reported proﬁt, income tax expense (and, hence, cash ﬂow), and the inventory valuation reported on the statement of ﬁnancial position.

Question

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The selection of inventory costing method affects reported profit, income tax expense, and inventory valuation on the balance sheet. Therefore, it is important to choose the appropriate method of inventory costing.

The Selection of a Method of Inventory Costing Is Important