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.

Question

Quizplus · Accepted Answer

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.

When Merchandise Inventory Is Shown on the Balance Sheet, Both