The first step in verifying the valuation of purchased inventory is in determining the valuation method used by the client. The 2nd step is:
A) determining that all inventory that is purchased is expensed through cost of goods sold.
B) determining which costs should be included in the valuation of an item of inventory.
C) determining that all inventory on hand reconciles to the perpetual inventory records.
D) determining that cut-off procedures have been adhered to prior to counting inventory.

Question

Quizplus · Accepted Answer

Once the valuation method used by the client has been determined, the next step in verifying the valuation of purchased inventory is to determine which costs should be included in the valuation of each item of inventory. This is important in order to ensure that the inventory is being valued accurately and in accordance with generally accepted accounting principles.

The First Step in Verifying the Valuation of Purchased Inventory