final thoughts?

In our final two chapters for the semester we are foarning about inventory and the different methods for calculating the ending values Forme as a tax Bccountant I can't stress enough how important inventory valuation is to financial statement properation So here's and example When we are calculating Cost of Goods Sold, we take beginning inventory, add purchases etc and the subtract onding inventory to arrive at the final cost of Goods Sold. This number is then subtracted from gross revenue to arrive as gross profit. If you want your overall profit to be higher you would value your ending inventory Tigher thereby gotting a lower COGS amount, which increases your profit But if the ending inventory figure is not really that high, you have now overstated your inventory asset on the balance shoot Your two main financial Statements are overstated! The same would be true for wanting lower income. You would understate your ending inventory, get a high COGS thereby lowering your income. In this case, assols are understated along with lower income. Many companies use ending inventory to manipulate their financial statements I had a chientoncs, every year I would call him to discuss his P&L and to get final numbers for his Schedule C Ultimately we would get around to inventory and I would ask him what his amount was he response "what does it need to be He know the game but I wasn't playing My response to him was always, it needs to be nghil Your final thoughts