Ethics in Inventory Management

Ethics in Inventory Management Student’s Name Institutional Affiliation Ethics in Inventory Management Accounting Principles and Practices Inventory accounting constitutes the valuation and tracking of the goods held for sale. There are two main principles in inventory accounting (Weygandt, 2018). Firstly, the cost principle states that inventory must be recorded at cost. Secondly, the matching principle states that COGS must be matched with the revenue for which it was produced. To estimate the cost of inventory and cost of goods sold (COGS), an organization uses inventory valuation methods like FIFO (first-in, first-out), LIFO (last-in, first-out), and weighted average. The FIFO method assumes that the oldest inventory will be sold first whereas LIFO assumes that the newest stock will be sold first (COGS and ending inventory values) (Laasch, 2024). Weighted average calculates an average cost for all units. The methods impact business profits, asset value, and, taxes as per ...