Accounting › Section I · Inventory › Topic I.4
Inventory errors and inventory ratios
A single mistake in a year-end stock count can push profit up one year and down the next. This topic traces how inventory errors flow through two years of statements, then shows how two ratios measure how efficiently a business turns its stock into sales.
In this topic
- Why one count reaches two years
- The pattern of an ending inventory error
- Worked example: an overstated count
- Worked example: the error reverses
- Other directions and correcting errors
- Inventory turnover
- Days' sales in inventory
- Worked example: Sorrel's ratios
- Common mistakes to avoid
- Key takeaways
This topic is part of Wuanberri Pro. Checking your access…