Merchandise inventory is adjusted in two steps because both the beginning and ending inventory figures are needed to prepare the income statement.

Question

Quizplus · Accepted Answer

Merchandise inventory is a key component in calculating the cost of goods sold, which is a necessary expense in determining net income on the income statement. To calculate the cost of goods sold, both the beginning and ending inventory values are needed, which is why merchandise inventory is adjusted in two steps.

Merchandise Inventory Is Adjusted in Two Steps Because Both the Beginning