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Question : Change in the inventory of a firm is treated as ____________.

Option 1: disinvestment

Option 2: investment

Option 3: liability

Option 4: asset


Team Careers360 25th Jan, 2024
Answer (1)
Team Careers360 27th Jan, 2024

Correct Answer: investment


Solution : The correct answer is investment .

Any changes to a company's inventory are considered investments. For all inventories that are comparable and intended for use by the entity, a corporation must apply the same cost formula. Using the weighted average cost or Last-in First-out (LIFO) inventory valuation method may lead to differing values for the cost of sales and ending inventory for the inventory accounting system (periodic or perpetual).

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