At the end of the accounting period the value of the inventory not sold is removed from that years cost of sales and carried into the next year as a current asset. This adjustment is in accordance with the following concept:

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The matching concept requires that expenses be matched with revenues in the period in which they are incurred, ensuring that the cost of unsold inventory is carried forward to match with future revenues when the inventory is sold.

At the End of the Accounting Period the Value of the Inventory