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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
                7. Why is the method of valuing inventory important?
(a)Â Â Â Â Inventory valuation is based on the actual flow of goods.
(b)Â Â Â Â Inventories always account for more than 50% of total assets
and therefore have a considerable impact on a company’s financial position.
(c)Â Â Â Â Companies desire to use the inventory valuation method that mini- mizes the cost of goods sold expense.
(d)Â Â Â Â The inventory valuation method chosen determines the value of inventory on the balance sheet and the cost of goods sold expense on the income statement, two items having considerable impact on the financial position of a company.
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