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significance of accounting for inventories

1. What is the significance of accounting for inventories? What "difference does it make" if the amounts reported are accurate or not?

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Hi there,
<br>Accounting for inventory is very important, especially if the business is involved in the selling of physical goods. If the company does not report that they have any inventory on hand when they actually do so, they would be underreporting their assets. This could have significant consequences in instances where the company holds bank covenants and their bank loans are dependent on ...

Solution Summary

This question involves the fundamentals of accounting