ACCT 504 Week 3 Discussion (Merchandising Operations and Inventory) Devry

Week 3 DQ 2: Merchandising Operations and Inventory

Inventory Cost-Flow Assumptions (Graded)

In this area, we will talk about how companies determine the year-end inventory value and cost of goods sold using one of the cost-flow assumptions. We will also discuss the impact of choosing a certain cost-flow assumption on the tax liability and other financial statement numbers of a company. Finally, we will discuss how to analyze inventory numbers. Why is inventory important for a business? How is inventory different from other assets of the business?