Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept
A) Adequate Disclosure.
B) Business Entity.
C) Consistent Reporting.
D) Perpetual Inventory.

Question

Quizplus · Accepted Answer

Adequate Disclosure requires that all relevant financial information is reported in a way that is understandable and useful to those reading the financial statements. Accurately calculating inventory cost ensures that the financial statements reflect the true financial position and performance of the business, which is a key aspect of Adequate Disclosure.

Calculating an Accurate Inventory Cost to Assure That Gross Profit