Accounting for IGCSE & O level - Final Statements (Section 1 - No. 24)
What is the effect of a higher inventory valuation on a company's financial statements?
Higher Cost of Goods Sold (COGS)
Higher Gross Profit
Higher Current Assets
Higher Equity
Explication
Higher inventory valuation leads to lower COGS (because higher costs are still in inventory), increasing gross profit, assets, and equity.