The most important accounting problem in dealing with merchandise inventory is the application of which of the following conventions or rules?
A) Materiality
B) Cost-benefit
C) Matching
D) Consistency

Question

Quizplus · Accepted Answer

The most important accounting problem in dealing with merchandise inventory is the application of the matching convention. This convention requires that expenses related to inventory, such as cost of goods sold, be matched with the revenues generated by the sale of that inventory. This ensures that the expenses and revenues are properly matched in the period in which they are incurred, resulting in accurate financial statements. Materiality, cost-benefit, and consistency are important accounting concepts, but they are not specifically related to merchandise inventory.

The Most Important Accounting Problem in Dealing with Merchandise Inventory