An Inventory Method in Which the Current Market Prices of Inventory

question 142

Short Answer

An inventory method in which the current market prices of inventory is compared with its cost and the lower of the two is selected as the inventory amount for financial statement reporting

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Definitions:

Cash-flow Method

A financial analysis approach that evaluates an investment's profit or loss by considering the timing and amount of cash inflows and outflows.

Business Valuation

A process and a set of procedures used to estimate the economic value of an owner’s interest in a business.

Profit Potential

The capacity or likelihood for a business venture to generate earnings over costs.

Balance Sheet Method

A financial accounting strategy for valuing assets or determining net worth by comparing what is owned to what is owed.