The reason for eliminating the price change in inventory is:
A) to measure the dollar increase in inventory.
B) to inflate profits of a company.
C) to increase the cost of inventory.
D) to measure the real increase in inventory.

Question

Quizplus · Accepted Answer

Eliminating the price change in inventory helps to measure the real increase in inventory, which is important for accurate financial reporting and decision-making. It removes the influence of inflation or deflation on the inventory value, allowing for a fair comparison of inventory levels across different periods. It is not done to inflate profits, increase the cost of inventory, or measure only the dollar increase in inventory.

The Reason for Eliminating the Price Change in Inventory Is