Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept

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Adequate Disclosure is the accounting concept that ensures all relevant financial information is reported in a clear and understandable manner, including accurate inventory costs to assure correct reporting of gross profit and net income on the income statement. This concept requires that all financial statements provide a complete, fair, and comprehensive reflection of the company's financial performance and position.

Calculating an Accurate Inventory Cost to Assure That Gross Profit