Management must include which of the following considerations when accounting for inventory
A) Costing method
B) Inventory system
C) Items to be included and their cost
D) Use of lower of cost and net realizable value
E) All of the above

Question

Quizplus · Accepted Answer

Management must consider all of these factors when accounting for inventory. The costing method (such as first-in, first-out or weighted average) will impact the value of inventory on the balance sheet and the cost of goods sold on the income statement. The inventory system (such as periodic or perpetual) will impact how often inventory is counted and valued. Management must decide which items are to be included in inventory and the cost at which they are valued. Finally, the use of lower of cost and net realizable value requires management to report inventory at the lower of its cost or its current market value.

Management Must Include Which of the Following Considerations When Accounting