Inventory is unique because it has characteristics of both transactions/events and account balances. Here's why:Transaction/Event Aspects:<ul><li>Inventory involves transactions like purchases and sales throughout the period</li><li>Movement of inventory (transfers, returns) represents events</li><li>Cost flows (FIFO, LIFO, weighted average) are tied to transactions</li></ul>Account Balance Aspects:<ul><li>Inventory is reported as an asset balance on the balance sheet</li><li>Physical inventory exists at a point in time</li><li>Valuation is assessed at the balance sheet date</li></ul>Because of this dual nature, inventory-related assertions cover both categories:Transaction/Event Assertions for Inventory:<ol><li>Occurrence - All recorded inventory transactions took place</li><li>Completeness - All inventory transactions are recorded</li><li>Accuracy - Transactions are recorded at correct amounts</li><li>Cutoff - Transactions are recorded in the proper period</li></ol>Balance Sheet Assertions for Inventory:<ol><li>Existence - The Recorded inventory physically exists</li><li>Rights and Obligations - The Entity has rights to the inventory</li><li>Completeness - All existing inventory is recorded</li><li>Valuation - Inventory is recorded at proper amounts (including consideration of net realisable value, obsolescence)</li></ol>Find more free resources related to <a target="_blank" href="https://learn.hamzah.academy/en/acca-free-courses">ACCA AA here</a>YOU can find helpful exam-focused video lectures on our <a target="_blank" href="https://www.youtube.com/watch?v=p7KFaU35ePc&amp;list=PL1mEPQVHJiLgm-YU3AXQRC84a7Bn-VZ1N">YouTube channel</a><div class="iframe-wrapper"><iframe src="https://www.youtube.com/embed/p7KFaU35ePc?si=wSWNKw38B3FCq_MD" frameborder="0" allowfullscreen="true"></iframe></div>

Learn how inventory assertions connect balance sheets and transactions, ensuring accuracy and reliability in financial reporting.

Understanding Inventory Assertions: Where Balance Sheet Meets Transactions

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Understanding Inventory Assertions: Where Balance Sheet Meets Transactions

Understanding Inventory Assertions: Where Balance Sheet Meets Transactions

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