The ending inventory of one year becomes the beginning inventory of the next year.

Question

Quizplus · Accepted Answer

This is a generally accepted accounting principle known as the continuity assumption. It assumes that the business will continue its operations in the future and that the value of the inventory at the end of the reporting period will be carried over to the next period as the beginning inventory. This ensures consistency and accuracy in financial reporting.

The Ending Inventory of One Year Becomes the Beginning Inventory