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The answer is How units of goods and their associated costs flow through the system .
Dollar amounts are assigned to goods sold and goods remaining in ending inventory by making an assumption regarding what how units of goods and their associated costs flow through the system
What is Ending inventory?
- Ending inventory is the value of products still accessible for deal and held by a company at the conclusion of an bookkeeping period.
- The dollar amount of ending inventory can be calculated utilizing numerous valuation strategies.
- In spite of the fact that the physical number of units in ending inventory is the same beneath any strategy, the dollar value of ending inventory is influenced by the stock valuation strategy chosen by management.
- The method chosen to dole out a dollar esteem to stock and COGS impacts values on both the pay explanation and adjust sheet.
- There are three common valuation strategies for stock: FIFO (to begin with in, to begin with out), LIFO (final in, to begin with out), and weighted-average taken a toll.
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