The Valuation of Merchandise

The Valuation of Merchandise - an automobile dealer...

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The Valuation of Merchandise To ensure the proper matching of expenses and revenues, decreases in the value of inventory due to  usage, damage, deterioration, obsolescence, and other factors must be recognized in the accounting  period during which the decrease occurs rather than the period during which the merchandise sells.  Inventory should never be valued at more than its  net realizable value , which equals its expected  sales price minus any associated selling expenses. For example, if a storm damages a car that cost 
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Unformatted text preview: an automobile dealer $25,000, and if the car can now be sold for no more than $23,000. Then the value of the car must be reported at $23,000. This decrease in the value of inventory is recognized by debiting the loss on inventory write-down account, which is an expense account, and by crediting inventory....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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