Question
Nick Hero owns and operates a large antique shop. He uses the specific identification method to account for transactions that affect inventory. Hero recently completed
Nick Hero owns and operates a large antique shop. He uses the specific identification method to account for transactions that affect inventory. Hero recently completed a physical inventory of the merchandise in his shop as part of his year-end work. Today, his accountant called to inform him that it would be necessary to adjust the inventory figure shown on the balance sheet, which will increase Heros tax liability. Hero argued that the inventory had to be correct, because he counted it twice and matched every item to an invoice. Explain the reasons why the accountant would find it necessary to adjust the inventory even if Hero's count is accurate.
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