Asked by Parker Elliott on Jun 29, 2024
Verified
When merchandise inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.
Merchandise Inventory
Merchandise inventory refers to the products a company has available for sale to customers at any given time.
Balance Sheet
The balance sheet is a financial statement that provides a snapshot of a company's assets, liabilities, and shareholders' equity at a specific point in time, offering insights into its financial health.
- Understand the principles behind direct disposal costs, days' sales in inventory calculation, and the significance of disclosing inventory valuation.
Verified Answer
CD
Cheyenne D JosephJun 30, 2024
Final Answer :
True
Explanation :
It is important to show both the cost method (such as FIFO or LIFO) and the valuation method (either lower of cost or market or net realizable value) used for inventory on the balance sheet. This provides transparency for investors and other users of the financial statements.
Learning Objectives
- Understand the principles behind direct disposal costs, days' sales in inventory calculation, and the significance of disclosing inventory valuation.
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