Question and answer
How can inventory be valued in accounting?
nventory valuation is the dollar amount associated with the items contained in a company’s inventory. Initially the amount is the cost of those items. [ However, under certain situations the cost could be replaced with a lower dollar amount. The inventory valuation includes all of the costs to get the inventory items in place and ready for sale. The inventory valuation excludes the costs of selling and administration. Since the inventory items are constantly being sold and restocked and since the costs of the items are constantly changing, a company must select a cost flow assumption. Cost
flow assumptions include first-in, first-out; weighted average; and last-in, first out. The company must consistently follow its stated cost flow assumption. A manufacturer’s inventory valuation will include the costs of production, namely direct materials, direct labor, and manufacturing overhead. Manufacturers are also required to consistently follow their cost flow assumptions. Inventory valuation is important in that it affects the cost of goods sold reported on the company’s income statement. Inventory is also an important component of a company’s current assets, working capital, and current ratio. ]
Expert answered|selymi|Points 10616|
Question|Rated good
Asked 6/8/2013 10:06:51 AM
0 Answers/Comments
This answer has been confirmed as correct and helpful.
s
Get an answer
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
definition of continuity assumption for accounting?
Weegy: Continuity is an accounting assumption that expects a business to continue in life indefinitely; also called going concern . [ It is the basis for using historical cost to value accounts rather than liquidation value since the company will remain in existence. ] (More)
Question
Expert Answered
Asked 6/1/2013 4:33:26 PM
0 Answers/Comments
identify the Specific identification method for inventory?
Weegy: Definition of 'Specific Identification Inventory Valuation Method' A method of keeping track of all items in an inventory. [ Specific identification inventory valuation is often used for larger items such as furniture or vehicles, but it is used to identify specific securities as well. This method of identification allows investors to reduce or offset capital gains by picking a specific lot of securities to be used as basis for a sale. ] (More)
Question
Expert Answered
Asked 6/8/2013 12:39:10 PM
0 Answers/Comments
Which inventory method is the best method and why?
Weegy: Using the Last-in, First-out method, the cost of the last unit of inventory purchased is subtracted from the price for which the company sells the finished product. The difference is the profit on the sale of the finished product. [ This method leaves all of the earlier-purchased raw material units in inventory, and the value of the inventory is determined using the older unit costs. ] (More)
Question
Expert Answered
Asked 6/8/2013 1:34:50 PM
0 Answers/Comments
for financial accounting what is an asset?
Weegy: Definition of 'Asset' 1. A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. 2. [ A balance sheet item representing what a firm owns. ] (More)
Question
Expert Answered
Asked 6/14/2013 2:39:32 PM
0 Answers/Comments
31,977,927
questions answered
GET
Answers.
GET THE APP.
weegy*
*
Get answers from Weegy and a team of really smart live experts.
Popular Conversations
S
L
P
L
P
Points 214 [Total 6237] Ratings 0 Comments 214 Invitations 0 Online
S
L
P
R
P
R
L
P
P
C
R
P
R
L
P
R
Points 171 [Total 12262] Ratings 1 Comments 161 Invitations 0 Online
S
L
P
1
Points 130 [Total 2986] Ratings 0 Comments 130 Invitations 0 Online
S
L
Points 123 [Total 1616] Ratings 1 Comments 113 Invitations 0 Offline
S
L
Points 104 [Total 3101] Ratings 0 Comments 104 Invitations 0 Online
S
L
Points 100 [Total 4485] Ratings 0 Comments 100 Invitations 0 Offline
S
L
Points 71 [Total 230] Ratings 0 Comments 71 Invitations 0 Offline
S
L
1
Points 61 [Total 3372] Ratings 1 Comments 51 Invitations 0 Offline
S
Points 54 [Total 54] Ratings 0 Comments 54 Invitations 0 Offline
S
Points 27 [Total 27] Ratings 0 Comments 17 Invitations 1 Online
* Excludes moderators and previous
winners (Include)
Home | Contact | Blog | About | Terms | Privacy | © Purple Inc.