The choice of an inventory valuation method can have a major impact on gross profit and cost of sales.

Question

Quizplus · Accepted Answer

The inventory valuation method used affects the value of closing inventory and the cost of goods sold, which in turn affects gross profit and cost of sales. Different methods such as FIFO, LIFO, and weighted average have different impacts on these values, leading to different financial and tax implications. Therefore, it is important to carefully select an appropriate inventory valuation method that fits a company's specific circumstances and goals.

The Choice of an Inventory Valuation Method Can Have a Major